About this Show

C-SPAN Weekend

News/Business.

NETWORK

DURATION
04:15:00

RATING

SCANNED IN
Annapolis, MD, USA

SOURCE
Comcast Cable

TUNER
Channel 81 (567 MHz)

VIDEO CODEC
mpeg2video

AUDIO CODEC
ac3

PIXEL WIDTH
704

PIXEL HEIGHT
480

TOPIC FREQUENCY

Us 57, Mexico 17, U.s. 16, Gregg 13, United States 12, Mr. Lew 10, Obama 8, Omb 8, America 7, Elizabeth Warren 6, China 6, North Sea 6, Crapo 6, Clinton 5, Bp 5, Alaska 5, Tony Hayward 4, Jacob Lew 4, Nelson 4, Jack 4,
Borrow a DVD
of this show
  CSPAN    C-SPAN Weekend    News/Business.  

    September 18, 2010
    2:00 - 6:15pm EDT  

2:00pm
believe that other countries like brazil, japan, the europeans have a vested in interest in seeing china play by the rules so to speak, rules that i might add they've agreed to in treaties. so my question is, you know, what do i tell my constituents or the small businesses in my district who have been financially impacted by unfair trade? what can i tell them other than we want to talk to them about this problem? what can i tell them that the administration and you are doing to try to help remedy that situation? . .
2:01pm
>> we have two basic things set we have to get authority to do -- that we have the authority to deal, even with current law, one is to make sure that we can use our accountability law and our anti-dumping law, and our import safety laws to make sure they are protected from both on fair
2:02pm
trade practices and surges from china in imports. we are losing -- we are using those laws very effectively. we have a right, under the wto, secondly, to make sure that when china is doing something else in china that limits our excess or unfairly discriminates, we can take them to the wto and get them to stop those practices. we're using the very effectively. we have a long way to go. we are having an portent debate , region and partisan debate, not about the object -- and the important debate, not about the objective, but what additional sets of tools we can use. many of these practices have more adverse effects on other
2:03pm
trading partners. we will try to use all those tools, and work with you and your colleagues to see if we can find better approaches. >> i appreciate your answers, and i encourage you to look at the currency reform for their trade act. with that, i will yield to the chairman. >> i think that was inappropriate place to end. mr. secretary, it has been a long day. i think he started on the senate side at 10:00. you have any meetings in between there and here. we appreciate not only your time, not only your talent, but your dedication. we are proud that you are here, and you will be hearing more from us. we will be talking to each other. with that, thank you, mr. camp. we stand adjourned.
2:04pm
[captions copyright national cable satellite corp. 2010] [captioning performed by national captioning institute] >> still to come, the confirmation hearing with jacob lew. his president obama choice to head the white house cut -- budget office. after that, more on another choice -- elizabeth warren has been selected to head up the consumer protection bureau. later, outgoing bp ceo tony hayward testifies in london and drilling safety measures. -- on drilling safety measures. sunday on newsmakers, kathleen sebelius talked about the new health-care law, part of which
2:05pm
goes into effect this thursday, september 23. she is interviewed by janet of "the wall street journal." >> for me or anyone else who is considering continuing on in public service, i think they're real question is, do you have a positive vision for the direction the country should have, we have specific ideas to employment that vision, and experience shows you can get it done? >> the outgoing governor on the potential of -- on a potential presidential run, and his eight years as governor. >> it is our jewel, i think, justifiable, to have an argument to say that we would not have a black middle-class had we not
2:06pm
have general motors, ford, and chrysler. >> he supported the car in the bailout of the auto industry. sunday night, he'll talk about his life, and was ahead for carmakers. >> earlier this week, president obama," nominee to head the budget office faced his first confirmation hearing. jacob lew previously served as white house budget director in the clinton administration, and currently serves as the state pardons deputy in charge of the budget. this is an hour and 50 minutes. we are considering president obama's nomination of jacob lew to be the nextnt to first welcok to the committee. he is well-known and well respected by the members of this committee. i also want to welcome jack's
2:07pm
family who are with him today including his wife, ruth and his daughter shoshana. we are pleased that they could be here as well. welcome. and we hope jack will introduce them when he makes his opening statement. i am sure he will. as everyone knows in public service, we could not do our jobs without the incredible support of our families and we recognize and very much appreciate the sacrifice that the lew family has made in the previous assignments jack has had, including as head of the omb. i believe jack is a superb choice for this position. when i was asked by the white house my reaction i told them i don't think you could make a better choice than jack lew. not only has the art he served in this critical post and i'm so with real distinction, but he brings with him a wide range of
2:08pm
public and private sector experience including his current position as deputy secretary of state for management and resources, which in itself is a challenging posting. importantly, jack knows how to make the tough choices that will be needed to put our country back on a sound fiscal course. when he completed his service at omb, the country had a surplus of more than 200 alien dollars. jack knows how to reach across the aisle to find bipartisan agreement. he was hinged metal and putting together the 1997 bipartisan deficit reduction package that help create those surpluses. and jack has the highest integrity. anyone who has worked closely with him over the years knows that. he has repeatedly proven himself to be an outstanding public servant.
2:09pm
so jacob lew brings with him exactly the kind of knowledge, experience, but partisan spirit and integrity that we need at omb right now. he is the ideal person to lead this critical agency. the economic and budget challenges facing the nation are great. in the near term we need to strengthen the economic recovery and promote job creation and at the same time, to address the nation's long-term fiscal crisis. we must begin now to put in place the deficit reduction policy that will kick in after the economy is on stronger footing. that is why the work of the president's bipartisan fiscal commission is so important. combining these policies of short-term job creation and long-term deficit reduction is no easy task but the fundamental economic security of the country depends on it. in these challenging times it is
2:10pm
imperative that we have strong leadership at omb. i hope we can move quickly on this nomination. we can't afford to leave this position vacant at such a critical time. it is my hope to schedule a committee vote on this nomination soon that the full senate has time to confirm the nominee before it adjourned for the election. before we swear in the witness and hear his testimony we will turn first to senator gregg, the ranking member of this committee for his opening statement so i want to thanks senator gregg for accommodating this change in the schedule, because of votes that are to come in the senate this morning and i also want to express my very strong appreciation to senator gregg for the support he has already shown for this nomination. senator gregg. >> thank you mr. chairman and i apologize i will have to leave early. there are people throughout our government who make government work.
2:11pm
but large segments of our government work well, and it is because of the people who dedicate themselves to public service and have gone the extra mile in that area. certainly jack lew falls in that category. i've had the great pleasure of knowing jack for years. he probably didn't know make when i was a junior member of the house and he was working for speaker o'neil but i knew of jack. and since then i've watched him do many jobs, all of them very well and with great integrity and great forthrightness and always gives you a straight answer. it may not be one you agree with but it is always a straight answer, and he is going to make the tough calls that have to be made at omb. he has already done it once and in fact he is willing to go in again may question his thought process but it is great to be who you are in the nation is fortunate to have you assume his
2:12pm
position during this time when clearly in my opinion the biggest threat to this nation after the potential of a terrorist using a weapon of mass distraction is our financial health, and we need leadership in the area of disciplining ourselves, financially and i look forward to working with you to accomplish that and i thank you again for being willing to take on this job and i especially appreciate your wife's understanding and allowing you to take on this job. thank you, jack. >> under committee rules, we are required to put the witness under oath so we will do that. will you please rise? do you swear that the testimony you are about to give will be the truth, the whole truth and nothing but the truth? if asked to do so in a given reasonable notice will you agree to appear before this committee and to answer any questions that members of this committee might
2:13pm
have? please be seated, and you may proceed with your testimony. i again want to thanks senator gregg for changing his schedule to accommodate this early beginning because of votes that are to follow. we know that he has prescheduled other things that he has to go to, but he will no doubt return. again, welcome to the committee and please proceed. >> thank you very much mr. chairman and i thanks senator gregg as well for the kind welcome and the very kind words of introduction. it is really been my honor to work with both of you for many years and i think that it really is a testimony to the possibility of bipartisan cooperation that i have known senator gregg for decades and well while we haven't always at reed we have always been able to work together in a constructive way and we have reached good results. i take great pride of my current
2:14pm
employer government service and it is really an honor to be considered today as the nominee to be the director of the office of management and budget. i am delighted that joining me today or my wife ruth and my daughter so shauna and my son and daughter-in-law who could not be here today. my family has ordered me unfailingly and unconditionally during my career in public service often through long hours, late nights and unfortunately more than a few missed family events. their daily sacrifices it made possible my public service and for that i am very grateful. i am also blessed to have had role models who have influence me. my parents and birth and irving lew taught me to importance of being involved in the community and the world around us. the late speaker was not just my boss for eight years but a mentor who shared his wisdom about the legislative policymaking process and more generally about how to forge consensus. it has been my honor and
2:15pm
privilege to serve under president clinton and most recently as deputy to secretary of state clinton and i am deeply grateful to both of them for the opportunity to serve and for their continued friendship. finally i'm grateful to president obama to nominating me to service the next director of the office of management and budget. i'm humbled by the conference is shown in me while we have to face the enormous challenges ahead. this is neither my first time testifying before the committee nor my first time testifying before the committee about budget issues. it gives me a knowledge of institutions working thing gives me a respect for it that is deep and heartfelt. i appreciate the centrality of the omb to the effective operation of the federal government and i have the greatest respect and admiration for the women and men who work there to fulfill those critical missions. since my previous service at omb i've worked in similar management and budget rolls and large nonprofit and private sector organizations. i experienced first-hand the all large organizations wrestle with
2:16pm
the same challenge, how to fulfill strategic core missions with scarce resources and competing demands. and d. the practice of forging consensus behind priorities directing new resources where they are most critical in finding internal savings to support these initiatives is a universal challenge. in addition, in my current role at the state department i have now been on the frontlines not just setting policies that working to implement them off often to define levels of detail and with the greatest mistakes-- to volunteer to serve. together these experiences from the past decade rovner perspective of the position for which you you are considering today. as we all know too well present obama has asked me to serve in his position at a time that is very different than the one i last sat in the director's office. in the late 1990s our challenge was how to make a prudent fiscal policy while transitioning to a world of budget surplus and robust economic growth.
2:17pm
today as there is a policy choices and the worst economic downturn since the great depression present us with very different challenges. with millions of americans who are desperately looking for work and still unable to find jobs our first task is to sustain and deepen the economic recovery, to spur new job creation in the face of unsustainable budget deficits. at the same time we must put a nation back on a sustainable fiscal course in the medium term on making investments critical to economic growth. and we need to do this in a way that strengthens our fiscal position for decades to calm. and d. the coming months may be the most critical time in fiscal policy in recent memory. as a presence that it will take tough choices and putting partisan differences aside to do what is right for the country today and what is right for our children and right for our grandchildren. throughout my career i've tried to work collaboratively with a cross partisan and ideological divide to cut through gridlock
2:18pm
and help solve what seemed like intractable problems. if confirmed as omb director i will work in that bipartisan fashion again with the members of this committee, the leadership of both chambers and with all the committed to taking suggestive steps to rejuvenate our nation's economy and its fiscal standing. well we should aspire to never waste taxpayer dollars regardless of whether the budget is in surplus or deficit the management of the federal government is particularly important during lean times and i look forward to working with this committee if confirmed to make sure every dollar we spend has the desired impact and makes a difference. getting our economy back on track in our fiscal house in order will take hard work. i'm under the president has asked me to join him in this endeavor and i'm grateful to this committee for its consideration of my nomination. thank you very much and i look forward to answering any questions that you have. >> thanks again jack. thanks for your previous service and thank you very much for being willing to step up to the
2:19pm
plate once again at a really, really remarkable challenging time. first of all, we have faced the greatest economic downturn since the great depression. i will never forget in 2008 being called into an emergency meeting and the majority leader's office, writing there at about 6:00 one evening and there was the head of the federal reserve, the secretary of the treasury in the previous administration all the leaders of congress, republicans and democrats and they were there to tell us they were taking over aig the next morning and they told us very clearly they weren't there to ask our approval. they weren't there to seek your approval. they were there to tell us they had made the decision to do it and they believed if they did not do it they would be a financial collapse in days. that is a sobering news as anyone can receive, and they gave their rationale.
2:20pm
the chairman of the federal reserve, secretary of the treasury by believed that would occur. and so we confronted the circumstance that if the government had not stepped forward and take in a series of very dramatic actions, we will could have faced another depression. in fact we now have an economic analysis from two very distinguished economists of differing philosophical background to tell us had these actions not been taken, we would currently have an unemployment rate of 16% and we would still be in a very severe economic downturn. while things remain difficult and challenging, unemployment stubbornly high and underemployment too high, nonetheless, we have been brought back from the brink. we were losing 800,000 jobs a month when president obama took
2:21pm
office. we are now seeing the creation of tens of thousands of jobs a month, although not nearly as much as what all of us would hope for. economic growth was a negative 6% in the first quarter. the president was in office and it has now turned positive, although not as strongly positive as i think all of us would hope for. so that is the circumstance that you inherit. you walk into a situation in which we have been brought back from the brink of what could have been a financial collapse and by the way not just here, but globally. and that meant the explosion of debt, because the government had to come in to prevent this collapse. that meant dramatically increased expenditures, dramatically reduced revenues as
2:22pm
they both cut taxes and spend money in order to prevent a collapse. but all of that is unsustainable even before this downturn occurred, we were on a long-term path that was unsustainable. i have warned my colleagues many times that the debt is the threat. i believe that deeply. so, while we have had to see an increase in debt in the short-term to avert a collapse, we now need to tip it and focus like a laser at ringing down this debt. what recommendations will you bring to the president for coping with this longer-term crisis? >> senator, i couldn't agree more that the situation that this administration inherited demanded immediate action. we were headed off the cliff in terms of where the economy might go. there was no obvious bottom and
2:23pm
the actions taken helps restore the ability for there to be a recovery and we are seeing a recovery. none of us are satisfied with the rate of a recovery. none of us are satisfied with the sustain high levels of unemployment. history tells a story of the path taken, not the path non-taken. if we had not responded to the very very severe economic crisis we would indeed be seeing much worse economic circumstances at much higher rates of unemployment. i think as we look ahead it is a very very significant challenge to simultaneously focus on the fact that we have to continue to encourage economic growth. we have to continue to encourage job creation, but we can't put off for years worrying about the deficit or do we have to be able to think about those in the same timeframe. i think the key challenges for us to begin to take action which won't have an effect today or tomorrow because i don't believe
2:24pm
that putting the brakes on today or tomorrow is the right answer but that we take actions that will send a signal of real confidence that right over the horizon we are putting in place the policies to put us back on a path towards fiscal discipline. i think it is possible to do that and i think it can only be done in a bipartisan way. i think the president has appointed a commission which you serve on which we are looking hopefully towards the results of that being a place where the beginning of a bipartisan consensus can begin to develop. i don't think we have faced a more significasignifica nt fiscal challenge in my lifetime and we will be judged based on our ability to respond. >> i think that is true. let me ask you this question. the president has put in place a fiscal commission. senator gregg and i had tried to get the commission to authorized by law. unfortunately we have fell somewhat short of a supermajority requirement. we did have a majority vote in the united states united states senate for that proposition.
2:25pm
the senate president then went to his authority to name by executive order a commission, 18 members, bipartisan commission, with the requirement that if 14 of the 18 of us can agree on a plane plan and both senator gregg and i serve on that commission, 14 of the 18 of us can agree there will be a report on december 1 and we have had a commitment from leadership from both the house and the senate that if they can agree there will be a vote in congress before the end of this year. the circumstance we confront is very clear. revenue is the lowest in has been as a share of our gross domestic product in 60 years. spending is the highest it has been as a share of our gross domestic product in 60 years. clearly, we need to reduce spending as a share of the economy and we need to raise revenue.
2:26pm
let me just say my own belief is, before we raise taxes on anyone, we ought to collect the taxes that are already do from people who are not now paying what they owe. if we collected what was owed, we wouldn't need any additional revenue increased by my calculation. we just collected what is owed. unfortunately, by mike actuation we are only collecting about 80% of what is owed. hartley because of the explosion of offshore tax havens, partly as a result of abuse attack shoulders that have grown geometrically. let me just ask you what is your view of the interaction between the office of management and budget mv work of this commission leading to a decision in december and what we will recommend? >> let me begin by saying i think the challenge we have is by leaving things on the table because the answer will not be one or another thing.
2:27pm
this will require many elements for us to make kind of progress that needs to be made her go i think that the administration has taken wisely the view of not restricting the space in which the commission can work. in an environment like this i have watched commissions work really since 1983 with the social security commission. it is a place where ideas can be faithfully pursued outside of the political spotlight and when you look to a commission, think what you can do from the point of view of either the congress or the executive branch is to give it a little bit of room so that the exploration of ideas whether they are ideal to end up agreeing to or not doesn't become in and of itself something that is too dangerous. the political environment has made it airy challenging to pursue ideas that might ultimately not be chosen because just the thought process of
2:28pm
going through and looking at the options becomes a liability. so i think the administration is wisely stepping back a little bit, giving the commission room and says we are open to the commission's recommendations. we look forward to being able to work with the commission's recommendations and i think most importantly if there could be the beginning of a bipartisan process on the commission take that forward and use it as a basis to work together in the year to calm. >> as far as the process goes that you describe, i am aware of the commitments that have been made. that is really a congressional decision but the president remains committed to the idea and i understand that that if there is a positive recommendation should be brought forward. >> i think that is an excellent answer. let me just reserve at this point senator gregg's time. we will do five minute rounds from the beginning given the notice by leadership last night that we are going to have votes
2:29pm
starting at the 10:30, 10:45 time range. i just want to thank all of our colleagues were accommodating this last-minute change moving up the scheduled because they gave us the indication that there would be votes on the floor at 10:30 to 10:45. >> thank you mr. chairman and thank you for many of the comments that you made in your opening because we are indeed facing a financial challenge of great import. i have a judiciary hearing at 10:00 so i will have to be leaving and i appreciate the opportunity to make a few comments and ask a few questions president obama's budget outlines an appropriate transition to-- from economic recovery to fiscal discipline
2:30pm
you stated in your answers to questions, questions on response to the committee. you stated, it lays out a path that brings deficits, annual deficits, not debt, deficits as a share of the economy from 10% of gdp this year to 4% of gdp in 2013. that is a goal that can be achieved out of confidence, probably more could be achieved, but mr. lew having been in this world before you know it won't be easy. there will be a lot of people that feel they should not take any haircut, and they trimming, and the lack of growth in their budget because what they are doing is so important that it just must be funded. that is the psychology we are dealing with and it is not an easy one. but i have trouble except thing
2:31pm
that as an example of real fiscal discipline. it plans to double the publicly held debt under the president's budget from 5.8 trillion to 11.6 trillion by 2012, triple within 10 years to 17.6 trillion by 2018 and that is just the chart we have used repeatedly. that is the cbo numbers bear that we have seen. interest payments, which are so significant to me and i would like my colleagues to examine that, interest payments skyrocket from $187 billion in 20092 in annual interest payment of $916 billion in 2020 which i think will be significantly higher than any other government expense at that time or at least higher than defense department budget today which are the highest. and that is a burden and there
2:32pm
is no free lunch. to spend money today we don't have and put burdens that we carry forever, unless we start paying down the debt. the president's budget basically calls for it planned, calls for a fiscal commission, which we can hope for to be successful. it has got some good people on it and i know you will work hard to support it. but the goal of this commission, i have got to tell you as stated by the president, is unacceptable. the goal of it is to stabilize the deficit at 3% of gdp. 3% of gdp. well, that would eeyin 2014 an annual deficit in the year 2014 of $724 billion. which is almost twice with president bush's highest deficit
2:33pm
wasn't he had a growing number of deficits that cause quite a bit of concern and criticism. so when you were, when you are omb your hand rightly deserve credit for seeing the budget talents, actually it talents not long after he came to the senate. do i get credit? >> a little bit, and little bit. >> but i would just suggest donald honesty that some of those 1994 republicans who shut the government down overspending deserve some credit and balancing that budget and they stood up and made tough choices, resisted increase spending, resisted president clinton's desire to spend more money year after year and very different things and essentially all of you together balance the budget. but the goal was to balance the budget, not to reach an area
2:34pm
where we have got a 3% annual deficit as a percentage of gdp. hopefully our economy will be growing in the future and 3% will be above the 720 billion. don't you think that is a fundamental flaw? do you think mr. lew that if we are going to ask the american people to stand up and put us on a sound financial footing, our goal within a foreseeable reasonable period of time should the to reach back? >> senator i was very proud on my last day of omb director to sit in this chair and have a chart to my right which showed interest on the debt being eliminated if we stayed on the path that we were on at the time when i left to the office of management and budget. there is no doubt that we are in an unsustainable fiscal situation right now. i think if you look at the goal of fiscal commission it is not the final goal. it is the next goal. the president's budget had a plan to get the deficit down to
2:35pm
4% of gdp. the commission was asked to bring it to 3% of gdp. we can't get to balance until we stabilize the debt, do we stabilize the deficit and it is the debt that follows. i think that the oates goal has to be to do more than that but i don't think that given the forecast that every one is working from right now, given the options that it will take to give the 3% that we should minimize how important it is to accomplish that goal of stabilizing the deficit. i think of the commission is able to help set of bipartisan options where we look at a range of mechanisms that will help us to bring the deficit to a level that is sustainable we will then be sitting down having a conversation about how to take the next step. ..
2:36pm
>> it is also important to remember that there was extremely significant budget reduction, and that was not a bipartisan effort. we should be looking at 1990 and 1997. that is what is good for the country. that is where the answers lie. i do not think anyone is saying that 3% of gdp forever is where the deficit should be. it would be a huge accomplishment to go from 10% to 3%. >> there is no doubt that would be progress. i believe you have much to offer and look forward to working with you. i just do not think leadership is setting a goal to reach an annual deficit of $724 billion.
2:37pm
we think -- i believe we need more clarity. we might surprise ourselves where we end up. i would note, but we did not have a deficit commission in the 1990's. it was battled out on the floor of the house and the senate, year after year, spending bill after spending bill. i'm sorry, mr. chairman. >> thank you. i was just sit at 3% is an interim goal. the charge to the commission is much more broad. i think it would be a failure if that is all we accomplished. i think what is absolutely essential is putting the country on a long-term, sustainable, fiscal basis. i agree with the senator. that will take a lot more than achieving the interim goal of
2:38pm
3%. in fact, my own belief is we have to try to get the debt as a share of gdp and -- not just to stabilize, that is the first thing, but then we have to reduce it so we have room for things i might occur in the future, whether it is a natural disaster, or a for an attack. >> i would note that we have had some bipartisan effort. i appreciate senator warner 214 -- working with myself to impose the spending limits the president has imposed. >> senator likened. >> -- senator and lincoln. >> thank you. you are not new to the scene.
2:39pm
i, too, remember the meeting that senator conrad described late at night at the office. the troubles of our economy started much longer before that. we saw the bullish economic policies pain for pretty much everything -- the bullish economic who reject the -- the bush economic policies pain for pretty much everything. of about $300 million with no end in sight -- 300 billion, sorry, with no end in sight. and we had to craft our way out of that to a point by the time you did leave we were looking at a surplus. i wondered if you could share with us some of the policies that he implemented back in the 90's to help us reduce that deficit, and can those lessons be applied today? >> i think that it's very important to remember that in the 1990's we operated in an
2:40pm
environment with rules that said that fiscal discipline is important. we had paygo rules, you could not have tax cuts or spending increases without having offsets. it was incredibly important, and the fact that the paygo rules last and we went through a long group period of time when there was freedom to both reduce taxes and increased spending without regard to whether there was an offset was a very significant come in attributing factor. no doubt the war and the economic downturn contributed to building up the deficit and the debt that we are now dealing with but an awful lot of it was a result of a lack of discipline and not paying for policy as it was being made. those rules actually preceded the administration that i served in. they were established in the previous budget agreement but they were honored by the administration and served in, and that meant saying no to an awful lot of things we would have liked to have them.
2:41pm
in 1993, they were very difficult measures taken, both to reduce spending and to increase revenue. it was done in a balanced way that was meant to be fair, not impose a burden on working americans where it could be avoided. and it showed a dedication to the principal of the fiscal discipline mattered. incredibly important that from 1993 to 1997 there was a sustained focus on fiscal discipline. and it was important that there was bipartisan after 1993. there were indeed members of the other parties that were very vocal speaking about fiscal discipline. in 1997 we had a bipartisan agreement. i think that the relationship between what we do in the federal government has a matter of fiscal policy, and the larger economy is one that is hard to map an economic equations. i think it is as much ecology as
2:42pm
math. the business commend the looks as what we are doing and they are confident and heading in the right direction or not. i think the fact that we are now in a place where the size of the deficit and the the lack of serious conversation about how to reduce it causes a great deal of unease and uncertainty which is one of the reasons businesses across the country are sitting on an awful lot of resources, cash, that could be invested and plants and equipment and hiring. i think we need to, together, not just about specific policies, but to show the kind of dedication that we are going to stay at it. there's not a silver bullet. it's not going to be solved with one or another individual policy. one of the most important things for us to remember is it is quick to take certain efforts with multiple elements and everybody finding room to compromise, and it will probably be done all at once. we will make progress and then have to make more progress.
2:43pm
i think in the 1990's the key was we stayed at it. and we got the job done. >> that's a thoughtful and i think some of us really need to focus to move forward. i appreciate that. i did want to also asked about the program we talked about when you came to my office. the program is responsible for cleaning up our federal government, legal and moral obligation, nuclear waste across the country. in my state extremely important, and as you know, the mission is about 25% of the doe budget, and i have been very clear with this administration. we have to be consistent and we need our legal and moral obligations. this administration has fallen short of meeting that and that waste that remains in my state and across the country from the manhattan project and called for efforts were from a war effort and now that we are hearing it, we may be seeing a 5% cut.
2:44pm
i want you to really think about the fact that this is defense spending and it can't be just defense when it suits the government, and i want to talk with you about making sure that we have a robust annual budget for e.m. that will meet the legal obligations that we have to clean up around the country and also your commitment and if you could give that to me today i would appreciate that. >> i am to stand the issue of dealing with these waysides as a critical and important not just in hanford but other parts of the country and it's an important environmental and health and safety challenge that we have to address. if confirmed, i will work with of the staff at omb and the team to fully understand the issues and i will work with you to try and see if we can come up with the best possible solution. >> i assure you we will have many conversations with this is extremely important. thank you very much.
2:45pm
>> i would like to on that second with what senator murray has said. i don't think i will ever forget being at a secure briefing and i can't discuss all of what was revealed. but this issue was critically important. it is a national priority. senator marie ably represents the state that is most involved or one of the most involved. but this really is a national priority and it's clearly important that we address it in that way. next we will go to senator with crapo. we are going to five minute rounds because of the votes announced on the floor. i also want to say senator crapo is a valued member of the fiscal commission. senator crapo. >> thank you, senator conrad. mr. lew, i appreciate you appearing before us today. i would like to join in supporting the comments made by senator murray and senator
2:46pm
conrad about the importance of the budget. it's critical that it receives the attention that it needs. and following along that, i want to talk to you first about the dod loan guarantee for the nuclear power production and the united states. i am a very strong proponent of the loan guarantees and this is a program that was authorized in 2005. it's critical in my opinion to the success of our movement into nuclear power as one of the more important parts of the national energy policy. unfortunately, we've faced in my opinion difficulty between the dod and omb and i am not quite sure why. but it appears to me that there is a problem with these two agencies working together effectively on this issue. we have had unnecessary bureaucratic holdups from what appear to be inside between the omb and doe and i don't know if
2:47pm
i have correctly described that but something is wrong because we cannot seem to get proper and timely movement forward on the process. as an example on inquired about some specifics in late november of 2009 with several other senators, and didn't even get a response after repeated attempts until just recently and i want to be clear about this because it's so important that this program function effectively and is not undermined by bureaucratic delay. omb in my opinion must be a close and transparent partner with doe in this process. and in my opinion, from what i've observed, doe is doing a good job and in my view trying to get loans out the door and get the program implemented but somewhere along the road, there is a blockage of some sort, and i don't know exactly how to tell you what the problem is, but there is a problem and i would just like to get your commitment that he will take a personal
2:48pm
interest in and try to see whatever the issue is between the omb and doe that we resolve it and get to a smooth operation in terms of implementing this program. >> senator, i must confess that i am not terribly familiar with the details of this. while i was out of government and i have not been involved from my current the vantage point at the state department. i do have a good relationship with secretary of chu, a great deal of respect and one of the important functions omb should play is to focus on what the issues need to be resolved and from a process that permits the issues to be addressed so the government can move forward effectively and smoothly and if confirmed, i would bring the appropriate people together to get up to speed quickly a. >> i appreciate that and i look forward to working with you and hopefully we can resolve these problems. one other thing i would like to get to before my time runs out is changing subjects entirely is
2:49pm
a secure schools and communities self-determination act are you familiar with this? >> i generally familiar. i wouldn't pretend to be familiar -- >> i and a stand and as a quick summary this is legislation. this is a program that is designed to help those communities and counties in the country where there is heavy federal ownership of property and therefore a lack of a private or property tax base in the county to have the federal government pay its fair share of operations in the county. that is a very quick summary. the problem we have is we continue to have to fight cycle after cycle for reauthorization of the program and we are coming up again in the near future with the need to reauthorize the program after the end of 2011 funding. and i would just like to be sure that the administration is aware of this and that the administration puts the reauthorization in the budget and proposes to move it forward so we don't have to have the
2:50pm
fight yet once again in congress as we move forward to try to get the program we authorized. >> while i'm not familiar with the details of that provision might and general to leave the familiar with the kind of approaches, and i've always felt it's important to be careful as we look at programs like that to make sure that we are appropriately compensated for the impact and not creating much larger programs than we otherwise would. and it that it be targeted appropriately. if confirmed by would work with omb staff to make sure i a understand that issue and i would be happy to speak with you about it. i don't have the detailed knowledge to respond on a detailed level. >> i will follow-up with you then after you get fully engaged on this but it's a critical program that has broad national support and we don't need to be going through this continuous cycle of trying to work it into the budget and we would appreciate your help and support on that.
2:51pm
>> thank you, senator crapo. senator cardin. >> thank you mr. chairman. but if all one senator crapo's plight as it relates to these guarantees for nuclear power. we had the same concerns. and it seems that there is a disagreement between the omb and doe how the cost is calculated under title 17 of the energy policy act the there is a disagreement as to whether you use the generic cost recovery, 55% or whether it should be sensitive to the individual transactions. we have a project moving forward at maryland, this is thousands of jobs. it's ready. it's important for our energy policy and our country and it has a strong support of our state and local communities and the bureaucracy is not working as effectively as it should so i just want you to know bipartisan interest to resolve this issue so we can move forward.
2:52pm
we are concerned that investors are getting nervous because of the delay and i would second senator crapo's point and ask you to give personal attention to resolve this we can move forward. the policy the obama administration is supporting and one in which has the support here in congress. >> at the risk of speculating about something i've already said i don't start out with the detailed knowledge. i suspect it is a credit budget scoring issue where we have won the law that tells how to score granted issues and another that has designed nuclear loan guarantee program and the challenges reconciling. i understand that is an important function to be in the middle of that space and coming to the resolution is important. i will have to go back and study the issue if confirmed to make short understand precisely what the resolution might look like. >> you are a quick learner. we are confident you will pick this up quickly and use your
2:53pm
talent to resolve it to move forward with policies you all agree is right for this country. and i just want to take my time to first thank you to be unwilling to do this again and think your family. you have had an incredible record of public service and we thank you for your contributions to the conference, to the several administrations and your work currently in the state department and now going back to omb. thank you for being willing to do this. this is tough work and i feel we all recognize we have to get back to the fiscal discipline that we had in the 1990's. and i think the challenges that as we start in the 21st century, that discipline wasn't there on tax cuts, it wasn't there on military spending and most recently with our major concern getting out of a major economic recession we had to figure out how to get our economy moving fiscal discipline wasn't there either.
2:54pm
and we have to restore fiscal discipline and the good news is i think we all understand it. the american public understands we need to get the budget into balance. there is genuine concern that our economy cannot sustain the types of deficits that we are currently not only sustaining but are projecting for the future. so i just really want to underscore the lesson that you mentioned from the 1990's on fiscal discipline and paygo. and i say that because we are currently under consideration of certain extensions of tax policies and i don't hear in the congress the type of discipline i would like to see. as it relates to not just non-defense spending but also revenue and military spending because all that needs to be subject to the same type of discipline if we are going to have a plan that will meet the
2:55pm
chairman's expectations and the president's expectations of where we need to be for this nation and secretary tom i think you can be extremely helpful to us in this debate. your credibility on the subject is well earned. you have accomplished a great deal and i thank you for moving forward and ask that you be fairly open and frank with us and getting us to focus on this issue that is so critically important to america's future. >> thank you, senator. i believe that as we go forward it's critical that we ask ourselves every time how are we going to pay for the things that we want to do. but i also think it's important to distinguish the actions taken to respond to the fiscal crisis from a normal spending. to create millions of jobs and in order to create economic growth where it didn't exist was critically important at the beginning of this administration to actually increase the
2:56pm
deficit. that was the exception to the rule. the was the way to stimulate the economy. it cannot become the normal rule. if it becomes the normal rule, then we run a path that goes nowhere good. but i don't think that i would compare the actions taken on say the recovery act to the actions taken on the other measures that you're describing. >> i totally agree with you. i was just trying to point out we've got to work together -- there is no question that managing the debt and managing spending is critically important for the tough economic activities you need to get out of the recession. that's -- to meet its basic economics and i fully support those policies. what i'm suggesting the ways you can't use this always and you need to recognize that now the deficit is being -- is a drag on our economy and that is part of the equation as we develop the next round of fiscal policies. >> it's always hard to change
2:57pm
gears. >> thank you, thank the senator for his strong state that as well. >> senator begich. >> thank you. i want to thank you for your willingness to serve and go through these hearings and once you are appointed there will be plenty more that you will be subjected to and wonder why you decided to do this again but thank you terrie much. >> my honor. >> i want to fall on a couple comments people had but before i do that, i want to talk about one specific alaska program that is called the dinallo commission. you may or may not be familiar. i guess in a few that are not a while you are familiar to some degree. it is in the process of again once again giving the reauthorization progress we have seen incredible success in alaska. with it we are the overhead left at 5% to administer incredible projects and develop infrastructure. the clinics in a very rural
2:58pm
areas and omb has always taken the view they've not been very kind to be very frank with you, but i can name program after program the federal government is very inefficient compared to this one that actually matches local dollars, federal dollars and talks about the sustainability what i think you're talking about today as how do you create these budgetary situations that create sustainability. i'm not asking you to make a comment. i would like further discussion but in order to do that and be very frank with you need to come to alaska. i would be remiss if i did not invite you but also, we have had seven cabinet secretaries the last year and half and multiple department heads. once they see the living conditions in some of these areas why the commission is critical and it's kind of a one shot in and then the local community to get from their there is no operating requirement afterwards by the federal government. i hope he would look kindly to that opportunity. >> thank you for the invitation.
2:59pm
i had actually hoped to go to alaska because a family illness i had to cancel the trip and it's been something i've meant to get back to. i am familiar with the disalle commission. there are years i was working on the budget when senator stevens cheered the appropriations committee. i became very familiar with the geography of alaska and i would look forward to working with you on these. >> agreed. we recognize there's some issues with gannet that need to be resolved and that is why the reauthorization we hope to do that. a couple of things in a broad context if i can, and over the last week here we've been struggling with resolving this 1099 initio trying to find a proper pay for. two amendments both failed. we introduced an amendment i put on the table with senator ben nelson from nebraska as well as others to resolve this issue and the question i have for you is will the allin be president said
3:00pm
that provision should be repealed because i think it's onerous and i'm probably one of the only people that fills the 1099s out as a small-business owner so when be willing to step up to the plate and help us resolve this and get a good pay for in a very short order? >> senator, i am familiar with the provision and i concur is important to find a way to make the profession not be as onerous and that would require 84. i'm not familiar with the conversations that have been going on, so if confirmed i would become familiar with them at a detailed level but i do concur that it's in our mutual interest to find a solution because it is a provision that while it was a pay for in the health reform bill it's not central but in the means of
3:01pm
financing, and by not sure that if i a understand it was well understood what the scope of the impact might have been a the time it was designed. and having filled out the 1099s i understand. >> you know exactly what i'm talking about. and i am good it's even more cumbersome and my it she was the irs never could tell you what the compliance rate was on the existing 1099 format the head for services so how could be determined with the success rate would be on this. i won't go into my rant about how cbo scores. i don't get it to be frank with you the way they do it. things that should be scored they don't score and things that don't make any sense, they score but i will leave that for another discussion because i think after you are confirmed, i hope he will be, one of the things i would like to find out over the long term is how accurate the scores have been. because we have spent so much
3:02pm
time debating the score, and then we move on to the next and never look back and see whether they are accurate or not, so that is again another discussion , another day and i will be looking forward to that. the last comment i guess i would like -- several other questions but just one quick and that is on the tax policy for the country as you know we are missing with the bush tax cuts and what's going to be and not be, and we will spend our time, a lot of work on it and then come back in here from now or two years from now or six months from now, and i guess i would like a wendi to take a serious look at a bill i have now co-sponsored which is the great wyden bill which gets rid of a lot of loopholes and flattens the tax rates for individuals to the three rates, 15, 20, 25, 33, takes the corporate rate from 25 to 24 giving a more competitive edge in the market and keeps the hard core issues that benefit middle class and help small
3:03pm
business. and it seems like two years from now we will be back. there's debate would special-interest groups is lobbying for what tax provision they want so they can tell their client gave them a good job versus something that is good for the american people and also it gives a certainty to the community because if these tax policies we are going to be tinkering with will not give certainty to the to manatee to unleash those golfers you mentioned. they are sitting idle. they are looking for the long term policy. i don't know if you have a quick comment. i am well over my time. >> yes, i think it has been a long time since there has been a serious discussion of the basic structure of the tax code. i think the general principle that the loophole closing is an important thing because it is for no other reason it promotes trusten the tax system because it promotes a sense of fairness people in comparable positions face comparable tax liabilities.
3:04pm
i'm not familiar with all of the pending proposals out there now. as you know it is principal with the department of treasury that handles tax policy that omb is very much involved of the matters of fiscal policy and i would imagine if confirmed by would be engaged in those. >> thank you mr. chairman. >> thank you, senator. senator alexander would you defer to senator whitehouse for five minutes because he has a judiciary -- thank you. >> thank the gentleman for his courtesy. senator whitehouse. >> i thank the senator from tennessee and mr. lew for his willingness to serve and his record to date. my questions will relate to health care and let me ask you first, as you look at the looming fiscal liability that our country faces, where in that our rate do you see our fiscal liability regarding health care? >> i think that there is no way of denying that health care is an important part of the economy. it's roughly 18% of our total
3:05pm
economy, and one can hardly talk about the forward-looking liabilities -- >> the forward liability eclipses' all others, does it not? >> it has been growing in the past, and i feel one of the challenges is to put the kind of reforms in place that begin to create some downward pressures on what the growth in health care costs are. >> let me ask about that, because at present in addition to the evidence of i guess now 18% of gdp being spent on health care, when we compare that to the competitor nations around the globe, no one is even close to having to carry that kind of a fiscal burden for their health care program are they? >> it has for many years been the case that we have had the anomalous situation of devoting more of our gdp to health care while we have had less people with coverage than some of our competitors which is one of the reason health care reform was so
3:06pm
important. >> and again, in addition we have had we do international comparison on health outcomes for the american people, compared to others, it is clear that we are getting nowhere near our money's worth for this colossal expenditures is that also correct? >> rediker what's clear is we need to have more knowledge about the outcome than the policy needs to be informed by that. one of the things the health reform bill does is it sets it mechanisms that will for the first time put in place those kind of mechanisms. >> let me go into that because that is exactly the place i am giving. the president's council of economic advisers said not long ago that it should be possible to cut the total health expenditures about 30% without worsening outcomes which would suggest that savings on the order of 5% of gdp could be feasible. now just to do the math quickly, something on the order of 5% of gdp is something on the order of $700 billion; is it not?
3:07pm
>> simple arithmetic. i'm not familiar with the report with that as the arithmetic, yes. >> i guess my point is there are very big stakes here, and everybody from your predecessor, director orszag to dr. the one [inaudible] who is one of the authors on this issue, pointed out that the way to get to that 700 billion is an iterative dynamic path of what the doctor called experimentation and learning. that is we use the tools and the health reform bill and others to learn our way through how to improve outcomes while improving the quality-of-care, and the concern that i have is that for reasons of it being that kind of and it read it and a dynamic process that needs to go forward, it exceeds the ability of the cbo to score eight and of omb to score it, and my worry is
3:08pm
that as we go into an environment in which we need to show progress on the deficit that this issue, reducing the cost health care by improving the quality-of-care, by improving outcomes and lowering costs and getting as much of the $700 billion in savings as we can will save, because it's not important and not because it's not the biggest number, not because it is not a win-win for the american people but because there isn't a hard score attached to that, and my primary question to you is are you willing to take off their goggles and scoring with a larger policy issues and potential to recognize the limitations of the scoring and assure that to the extent you can in this administration and as the director of omb you give this issue of health care reform before energy and attention and interest that it deserves. >> senator, one of the issues i
3:09pm
have worked most intently on in my 20 years of public service is of care, and it is an issue for which i have a great deal of passion and more than a little bit of experience. i think that the affordable care act was a historic piece of legislation that both created a path to coverage for millions of americans and set in motion forces to lead to the kind of reforms that you're describing. i think the implementation of the affordable care act as one of this administration's highest priorities. as the omb director the president made it clear to me he expected me if confirmed to pay a great deal of attention to it and is something i look forward to participating in. >> we will work well together then. i appreciate your appreciation of this as a significant a priority and thank the senator from tennessee for his courtesy to me. appreciate it. >> senator alexander. >> mr. lew, thank you. and for being willing to serve.
3:10pm
if i'm not mistaken, the entitlement spending is about 60% of the budget; is that about right? >> more or less. >> would you think and this time of what i think is overspending and alarming deficit is a good idea to not have a new entitlement spending? >> i think the growth of entitlement is principally driven by health care and social security. ceramica but i mean to authorize new entitlement spending don't you think would be a good idea to not have any new spending? >> as we go for the challenges in an environment defined by the paygo rules to make sure anything that we do in this area that we pay for. i think that the challenge of finding savings is very real and we have to begin by not creating new long-term expenditures without worrying about how we are paying --
3:11pm
>> don't you see a difference between entitlement that in title that is on automatic pilot and we never get control of it. if it's discretionary we have to prove it every year. >> i think the programs like social security, medicare, medicaid that have been set of the way they are are not outside of our curfew. i know that in the case of medicare and medicaid i have on many occasions participated in the process these that have changed those programs. >> hard to do though, isn't it? >> it is hard and i don't think we should think of them as beyond our reach. we have to be careful about what we do because people have the right to the benefits that they paid for and expect to earn, but i don't agree with the motion they are kind of on automatic pilot and out of our control. in 1983 we put it to the contrary by having very significant social security reform that create a generation of stokely in the program. skype let me if i may get in the
3:12pm
unlimited -- limited time, do you think it is a good idea kasich obama at patrician proposed converting the entire program to the mandatory side of the budget and provide annual increase of 1% a year. this would shift about 300 billion over ten years to the mandatory side of the budget. plus 118 billion to five of the maximum grant program plus another 69 billion to increase and index the maximum award. that is a lot of money. republicans on the appropriations committee suggested we spend about 300 billion over ten years less than the president asked for this year and the majority leader says he agrees with that, and we all think that just affects 30% of the budget, not counting the emergency spending. and we are all proud of the fact we may be able to save 300 billion right now. but the administration is coming along and proposing erasing the effort and spending nearly half a trillion moving from
3:13pm
discretionary to mandatory. isn't that an on wise thing to do in the middle of such -- >> senator, i would begin by saying the pell grant program is enormously important. if we look to the future of this country, the education of the young men and women who go through the paul grant programs -- >> let's say you and i agree on that. >> with in terms of the economic growth and in fairness of the country. i think the proposal of the president's budget as understand, and i was not at omb design it so have an outside knowledge, but understanding it was in the context of an overall budget that observed the paygo rules that would have paid for it. so i think that it's important to ask the question not should we make that kind of a change in pell grant, but are we truly in a position to pay for it. >> so if we can pay for it, you see no problem with getting half a trillion dollars, taking half a trillion from the discretionary side and putting it on automatic pilot?
3:14pm
>> i think that the bipartisan support for paul grant -- pell grant of the 26 years i've worked on the funding chose the be substantial funding for paul grand whichever side it's on. i think that the proposal was not so much to increase the spending except on low-margin but -- >> you're talking -- you're basically saying you think it's okay to have a half trillion dollars in mandatory spending at a time the president's proposals would double the budget in five years and trouble them intend, double the budget. >> the question is are we paying for it. >> when you were omb director during the clinton administration you supported by annual budgeting. do you think that's a good idea? >> i testified several times before the congress on it and i observed at the time as i believe now that the annual budget process gives us precious little time to focus on program implementation both in the executive branch and in the legislative branch.
3:15pm
there are many challenges to buying the budgeting. the systems of congress are well-established. the dealings with annual appropriations is more than a tradition. it's really deeply ingrained mode of thinking and functioning. it would require changing the way everyone thinks and acts in a dramatic way. i think the goal of creating a space to focus on program management and implementation is a worthy one of. i have yet in some of many years discussed i've never seen the consensus formed around it but i think it is the kind of conversation very much worth pursuing because the effective implementation of the programs is negative one of the challenges of that omb and in the congress that we all need to pay a great deal of attention to. >> my time is up. can i make an observation in response to that? thank you, mr. lew, for that comment. i hope we can continue that
3:16pm
conversation. because that idea, the idea of a two-year budget has bipartisan roots, and it has more support today on the republican side, and among the appropriators, than it did 20 years ago or ten years ago. and we feel, many of us on the republican side and i assure my colleagues on the democrats' side would agree we have an important job in oversight and as you say spending one year on the appropriations and the next year on program implementation repeal a review of excessive regulations would be a very healthy thing for a government that is grown too complicated and too big city that is an area where we can have further discussions. >> and i would just add that every proposal for the budget is recognized the need for the midcourse correction because the decisions made on a long-term basis undoubtedly will run in to changed circumstances that would need to be addressed.
3:17pm
so it's both of the oversight but also the effective mechanism for the midcourse correction that would be worked through. >> thank you, mr. chairman. >> on this point if i can for a moment i've been a longtime opponent of the budget. i don't know of any large institution that doesn't budget every year. but with that said, given what i have now over these last many years, and the election years it has now become the rule rather than the exception that we don't have a budget. that is not a healthy thing. and it may require that we move to a form of bayh annual budgeting so that we can assure that there is a budget blueprint in place. the only time we have been able to break that and the last number of years was in 2008i was able to get a budget through in
3:18pm
an auction year but if you go back, republicans and democrats in charge of the senate, we are now falling into a pattern in which we do not do a budget in each election year. so i must say my attitude is changing very dramatically on this issue and i would be happy to work with the senator and others to see if we cannot form a proposal that could get adopted and we put in place and effective plan the board assure a budget blueprint. >> [inaudible] >> i'm not sure i want to copy texas. senator nelson. >> i understand the subject came up about the deficit reduction commission. what to offer further comments, please? >> senator, i think the deficit reduction commission was given one of the most important
3:19pm
challenges and assignments that we've faced as a country today. how to do we get our fiscal house in order and get back on a path to having a sustainable level of debt and deficit. it is a very hard to challenge. getting from 10% of gdp deficits to 3% of gdp deficits requires a broad array of difficult decisions and choices. one of the keys to the way the commission set up is it was set up on a bipartisan basis with people's integrity on both sides and the call to come together and try and find areas where there could possibly be a bipartisan consensus. the administration has taken the view correctly that if you give some space to the commission and let that work be done outside of the 24-hour news cycle without seams being taken off the table prematurely, and that doesn't mean embracing everything that might be discussed in the
3:20pm
commission. certainly there will be things discussed with the commission that not everyone on the commission will agree to and those outside of the commission might have an issue with. but i think it's important that there be a space where the commission can do its work and hopefully come back in early december with a report that has a bipartisan consensus. >> you worked for tip o'neill, and if you will recall one of the most successful acts in government was a bipartisan commission to save social security in 1983. i would like your opinion on the experience of that success compared to the present attempt given the fact that you basically had two older irishman back then.
3:21pm
one who was president and one who was speaker that basically threw their weight behind the bipartisan commission and kept social security off the table as an election issue that the next election. that doesn't seem to be the case in this toxic, highly partisan atmosphere that we have now. your observations? >> senator, i was glad to be speaker tip o'neill's liaison to the social security commission, and as the successful work of that commission is something i am proud to have been associated with. i think that the challenge of the time was to be in a political environment was highly charged, while not taking specific things off the table so that there was nothing to talk about in the commission. and i know that my role working for the speaker of the time was to help him think through how
3:22pm
could he take a position the was very principled in terms of defending social security and standing up for a program that he and i both believe is one of the greatest things we've done in this country while leaving open some space for people of good will to come to a set of recommendations the would solve a problem without which the american people wouldn't have confidence in this great program. there were a number of components of the social security commission report that i vote easily could have been taken off the table in a political reason. the fact that they weren't, one of the reason that commission was able to succeed and i think it was important that there was a discussion to those ideas taking place outside of the kind of heat of the political environment because of the time social security was as it still is called the third rail of american politics. i don't think that there is a soul alive who would question speaker o'neill's commitment the social security program.
3:23pm
i for one thing he showed the greatest respect and loyalty to that program by permitting the discussion to take place and then embracing it with president ronald reagan and agree to things the two of them coming forward made it possible to take what was a historic and important action. >> can you imagine senator obama, president obama and senator mcconnell and leader boehner coming forward after this election and in raising a report of the deficit commission that would be passed, has to be passed by 14 of the 18 members? >> i think it is highly premature to think about the outcome, though specific outcomes of the commission. one of the elements giving it space is we haven't commented a lot on the specific work of the commission, and i think that is
3:24pm
appropriate. one thing i will observe is the general principle that we have almost always been surprised buy unlikely allies coming together when there has been a real bipartisan progress. people were surprised when president ronald reagan and speaker o'neill came together in 1983. people were surprised when speaker gingrich and president clinton came together in 1997, so i do believe in the possibility things don't look most likely for where we sit today. >> i would just say in conclusion one of the things i learned when i sat at the knee of tip o'neill was that he and president rall riggins would fight like the dickens with a would walk out the door of the end of day as personal friends, and that personal relationship
3:25pm
led to an atmosphere by which one it was time to build a consensus they can do it. i'm fearful those personal relationships don't exist today. >> i thank the senator. i would say on this committee they do. senator gregg and i fight mightily on issues of policy, but at the end of the day we are personal friends. and i do think that helped us get a commission form, and i also want to acknowledge that in the negotiation of the commission, senator nelson played a key role, and when i needed a strong ally to go to the vice president's residence on a weekend, senator nelson volunteered for the effort and played a very constructive role. senator in some. >> thank you, mr. chairman. i think it is because you and senator gregg have such sweet
3:26pm
personalities. [laughter] spinet mr. lew, thank you for volunteering that is really critical time in the country's history. we had a nice visit in my office yesterday and i appreciated that time with you and i know we have some flaws all of differences, but i certainly respect to work in your intellect you have a huge challenge ahead at this critical time. i think what senator nelson said about us being bipartisan at this time because this debt crisis that we have, i mean, just look at the chart they have displayed up their, that's the interest we are going to pay on our debt each year and the president's numbers going in 2011, over $200 billion over $900 billion by 2020, and we know those numbers are scary.
3:27pm
those numbers -- because we don't get anything for it. it's like a family that has a credit card. think about this as our national credit card. we don't get anything for interest the money that we pay on interest on our national credit card. a waste of money. we don't build any roads, we don't get any better benefits for it, we don't get social security benefits, it's just money that goes out the door and it's because we've been overspending for too many years and this debt commission certainly is important if we do embrace and we have the political courage because this is going to take courage. i realize we have a difficult philosophy about how to get the economy going but certainly getting the economy going is something we can agree on. how to do it is different and i believe we should be cutting taxes and cutting spending.
3:28pm
the administration has a different philosophy on that, but once the economy is strong we still have massive spending going on in washington, d.c. to deal with. and it isn't just from the stimulus bill. we've dramatically increased discretionary spending and all of the appropriations, even on the security appropriations over the last couple of years and everybody is talking about fiscal responsibility now. but when it comes to votes, we are not getting those kinds of votes. well, i'm not sure exactly when that is going to happen, but we absolutely need it to happen. if you could pull open the next slide please. this is debt held by the public as a percentage of gdp and we can see what it has done historically. it's had its ups and downs but it isn't anything compared to a but according to the president's budget is going to happen over the next ten years. and, i mean, these numbers are
3:29pm
completely on a sustainable if you go to the next slide this shows what people have been talking about debt held by the public that it doubles and five years and it troubles in ten years -- and triples in ten years. i look at this for my perspective, a family, a business, state governments, local governments, federal government's, debt at a certain point will collapse, whether it's personal bankruptcy or whether it's the country's bankruptcy. debt becomes too big at some point, and we, as a nation, you know, we have a aaa rating on our sovereign debt right now. well, that aaa rating is in trouble. you hear talk about it right now, and we don't know when, you know, the rating agencies are going to decide that america is maybe not the safest place, and so it doesn't deserve that aaa
3:30pm
rating. but if it does happen, we are in trouble. we are in absolute trouble. we know that is a possibility. what we saw happen in greece on our television sets earlier this year, grace said the european union to bail them out. we don't have anybody to bail us out. if the united states goes down, the rest of the world's economy comes with us. and that's why i believe it is so critical for us at this junction in history to join together as republicans and democrats, for get our party labels. this debt is such a serious problem. i actually am one of those people who, you know, as far as the tax cuts are concerned, i would rather see the tax cuts offset with spending cuts. if you're going to keep the rates the same which i believe they should be i do believe in spending reductions. you know, to pay for those. i think that the more that we can hold down this deficit and this debt, the better off that we are going to be long term as far as economic health for this country is concerned.
3:31pm
you know, if given the choice whether to raise taxes, in other words, if you were only given the trees to keep taxes where they are and not pay for them or raise taxes, i would choose keeping taxes where they are and not paying for them but my ideal situation would be to lower taxes or keep them where they are and cut spending to be about to pay for those so we are not increasing the deficit. i think it is over history is shown that that is the best way to go. but my basic the to you is going to be a work when the chairman upon your confirmation is that you do everything you can to encourage the administration to reach across the aisle, to join those of us willing to join you and attack this serious debt problem we have in the united states, because it is absolutely, i believe unsustainable, and it is going
3:32pm
to threaten the very future of the united states economy. and when you threaten the future of the united states economy you threaten the future of the constitutional republic. so mr. chairman, i know i didn't have any questions but this is important to talk about, and so critical for us as senators appear and members of the house, senators and the white house to be working on this as we go forward. >> thank the senator. senator sanders. >> thank you very much, mr. chairman and mr. lew for joining us my good friend, mr. ensign, i'm glad my republican friends are concerned but let us remind some of us in the voting for the war iraq and iraq that $3 trillion wasn't paid for. not me, not many others. some of us voted for huge tax breaks for the rich. many hundreds of billions of dollars which added to part of the problem of how under bush we
3:33pm
almost doubled the national debt. some of us voted for it, some of us didn't. some of us voted for the medicare part of the prescription drug program written by the insurance companies that was not paid for. some of those voted for it and some of us didn't. >> know, some of us didn't. >> i wasn't talking about you in particular but it did pass under republican leadership. some food for the wall street bailout. some of the money was repaid, some of it wasn't. some of us didn't vote. so we before we talk about the serious of the debt and i agree it is a serious issue, let's remember how we got there, who voted for the sum paid programs and who didn't. but mr. lew, welcome and thank you for a much for your service. senator ensign and senator alexander and others are right, it is a serious problem. we have to deal with it, but it's one of many problems. among the many things, the middle class is collapsing, poverty is increasing. when president bush was president, the middle class all
3:34pm
a $2,000 a year decline in the median family income. the issue i want to talk about, which i hear little discussion about and what your views on, is the fact the united states today has the most unequal distribution of income and wealth of any major country on earth. sometimes we talk about the economy like we are all in this together. we clearly are not. i want your judgment and tell me what you think. in 2007 the wealthiest 1% earned 23.5% of all income in america. in the 1970's, that number was 8%. the top 1% in the 70's earned 8%, top 1% now is earning almost 24% of all income. do you think that that is okay? do you think that that is an issue the president should focus on? do you think that it is morally okay and economically okay? ..
3:35pm
i think that the real challenge we face is how to grow the economy, grow jobs, create a kind of better income earning opportunity for more working americans. >> we certainly agree, and that is what everybody says, but the reality is, over the last 30 years, almost all of the new income created has gone to the top 1%. do you think that is morally acceptable? >> i think that is very important that we focus on what
3:36pm
are the income levels of working americans, middle-income americans, and the decline of incomes is not a good thing. >> in your judgment, and certainly was exacerbated during the bush years, but it would be wrong to say that it was only during the bush years, why over the last 30 years has the middle class significantly declined? the rich become a much richer and poverty has increased in america. in your judgment? >> i think there are trends in our economy that have done tremendous damage to the manufacturing base of our economy. the loss of manufacturing jobs has had a lot to do with it. i think that we need to look at the kinds of trends that you are talking about and ask how do our policies affect that? i know that over the years i have worked hard on issues like income tax credits to address issues like that.
3:37pm
there are federal responses that could be effective, but are not effective enough. >> you have touched on an extremely important point. i know that my state is not a major manufacturing state, but we lost over four million manufacturing jobs under george bush. many of us believe that one of the reasons, not the only reason, is the trade policy that says that you can throw american workers out on the street, hire people in china for cheap, and bring a cheap product into this country. what do think about trade policy? are they working or have they helped destroy manufacturing in america? t is important that we look at these issues for both the benefits that come from enhanced trade, free trade and the potential cost.
3:38pm
>> the benefits about the losses? >> i think the risk of the united states is close enough -- >> that wasn't the question. going back in history, do you think the unlimited free trade policies that have come from reagan on the republicans and democrats have benefited the american worker or hurt the american worker? >> i think for a worker who lost her job -- >> it wasn't my question. >> i can't think of the statistical averages. i have to go back and look at them. i understand that the trade policies have been there've been many benefits as well as costs. the cost of so we focus on pure we have to ask the question, is that because of unfair policies? >> reason is not that complicated when you can hire people for 30 cents an hour, that's a pretty good reason to go abroad. >> i think it's very important moment like a trade agreement to ask whether the kind of laws that protect workers rights, the
3:39pm
laws that protect environmental standards are in effect. >> where that under president clinton and he was wrong. i'm afraid those touting the line are wrong today. we're in the midst of a tremendous recession. 16% are unemployed or underemployed. clearly the media precipitating it was the collapse on wall street. do you believe the deregulation of wall street like alan greenspan, walter rubin significant contributed significantly to the collapse several years ago. >> would discuss them mention i don't consider myself an expert in some of these aspects of the financial industry. my experience in the financial industry has benefit manager come not an investment advisor. my sense is that someone who has generally been familiar with his trends is that the problems in the financial industry preceded deregulation. there was an increasing emphasis on highly abstract leverage
3:40pm
derivatives products that got us to the point that in the period of time leading up to the financial crisis, risk were taken. it went fully embrace. we weren't fully understood. i don't personally know the extent to which deregulation drove it, but i don't believe that deregulation was the approximate cost. i would defer to others who are more expert about the industry to try and parse it better than not. >> thank you, mr. lew. and thank you, mr. chairman. >> let me just say i think this ever important points. i am investment of what led to the collapse was a combination really a toxic group of overly loose fiscal policy, explosion of debt in the previous administration when times are good and overly loose fiscal policy following 9/11, the federal reserve keeping interest rates abnormally low for an extended. if time.
3:41pm
and the result being an overly loose fiscal policy in an overly loose monetary policy at the same time, something you rarely see an economic is great, coupled with a regulation. i think the senator is entirely right. i think deregulation -- part of that toxic group has an essential responsibility in the near collapse. and i don't know how it can be otherwise. we had trillions of dollars of derivatives, exotic insurance products that were deployed to try to defend against people taking outsized risks. major financial houses that were satisfied with the 11th one leverage one of 30 to one leverage and got 30 to one leverage under the previous administration. that 30 to one leverage works great when things are going up. it doesn't work so good when
3:42pm
things are going down. and the other -- the previous administration looked the other way. it absolutely did. i think the economic history of it is clear. i just read the book at the way, the big short. you want interesting education what occurred, read that book, the big short. senator berkley. >> thank you very much, mr. chair and bear stearns actually at 40 to one. and actually 40 to one to 21 in a single year, just phenomenal. >> the senator is talking about leverage? >> yes. there were firms that were well over 40 to one leverage, which means if you -- it's something you're betting on goes up 1 dollar to make $40. it also means that goes down 1 dollar you make $40. >> you crash overnight when the market turns an e-mail to entire economy and that's where we are now. i want to turn to a piece of the oregon economy, which is in
3:43pm
arrangement regarding our forests. in 19 away, the federal government worked out a deal that said hey, our forests take a big chunks of counties throughout oregon. in another state that were not p90 property taxes. and clearly you have to maintain infrastructure. over 20% sharing arrangement. along comes from the century and environmental overlays have proceeded to take lands that was visibly satisfied, the lnc lands for the counties and essentially timber can't be cut on it. and so, a deal was worked in 2000 that extended until now in a few different iterations to said we understand were not allowing you to cut. we understand there's a revenue-sharing circling to now compensate by billing filling in that whole of those revenues into the infrastructure of the counties. this is a center but still firm the federal government and the communities that is dramatically
3:44pm
affected, so are many other states. and president obama said during his campaign if he understood this and he would bring people together, that he would forge a long-term solution, that he was supportive. well, this latest piece of this is expiring 2011. and this contract needs to be honored during the federal government in the people of my state that have large tracts of forest. are you prepared to make that happen? >> senator, i'm generally familiar with the issue. and if confirmed, i am as they would become much more familiar with the issues. the one general, i note that the question of what the impact of federal policies are in districts is something that has been challenging to calculate what the right kind of compensation is. i would certainly commit to working through those issues, understand that working with
3:45pm
you. >> i'm going to say that's not satisfactory. our president made a commitment. this commitment essential to the economies of my stay. the secretary of agriculture is working on it, secretary of interior is working on it. but getting this into the budget is essential that it's been put together right now. and i would like you to come up to speed on this topic and have your commitment that you're going to get this done before your confirmed because this is the life blood. thirty-three of my 36 counties are profoundly affect did by this long-term contract with the federal government over the use of the force plants. they would much more prefer to be able to law. that creates jobs. but as long as the federal rules have turned back a possibility at a minimum, the revenues necessary to operate the infrastructure of the county or contribute to that effort needs to be sustained in the steel.
3:46pm
and so if you're not adequate or familiar ticket that today, i'm asking that you come up to speed on it. i certainly feel like it is essential that anyone had he not this position, not only historic structure, understand why it's essential and plans to honor the contracts that was developed between timber counties in the federal government. >> senator, i certainly agree in principle that commitments made should be honored. and i have to confess that there are number of details of the federal budget that i haven't focused on in the last 10 years in the same detail than i was last time. i can make the commitment to come up to speed quickly and to be happy to have appropriate interaction with you on the. >> i'll look forward to that.
3:47pm
>> thank you, mr. chairman. >> thank you from a senator berkley. let me just say that i think sunder merkley has discussed this very clearly and very forcefully to those of us on the committee. and we understand the importance is placed in the economy of the state and i intend to be with senator merkley on this. he is made very, very clear to the members of this committee the importance to him and his state. so i went to rivet the point. >> thank you very much, mr. chair. and i appreciate your support when we have a space holder for this program in our budget plan. it's very hopeful and recognizes the fact that this needs to be a contract honored. >> and i've committed to the senator on this matter and tend to absolutely keep that
3:48pm
commitment. you know, there are these issues better in each of our state are critically important. i have an issue in my state that i want to raise as well because we have a federal working group that is considering options in dealing with the crisis in my stay. the crisis is in the devils lake basin. we have of late that is, 30 feet in the last 17 years. and it is a lake that is three times the size of the district of columbia. and there's nothing else like it anywhere in the country. they have a runaway lake that is gone from 49,000 acres to 180,000 acres. and it is now six speed from an uncontrolled release. as this after going up to 30 feet in the last 17 years.
3:49pm
going up three and a half feet last year, went up over two feet this year. were now within six feet of having an uncontrolled release from this lake, which would create massive flooding problems not only in the devils lake basin, but for every city and town downstream. towns that have had massive flooding two years ago. if this were an uncontrolled release of water, their flood stages would be five feet above what they experienced in 2008 and the water would stay high for 30 days. this is almost biblical in terms of the threat to the eastern part of my stay. i have had a series of hearings all across the state and every affect at area. i have had a flood summit with every federal agency that has a responsibility represented.
3:50pm
we have asked the administration and they agreed to put together a federal working group. omb is a very important part of that working group. they are about to issue their report. i am extremely concerned about what i here might be in that report. i have not seen anything in writing, but i can tell you that there are certain things that simply must be done. we must move additional water off that lake. we must change water quality provisions in order to do that. we must relax the water quality standards in order to be able to do that. there is no serious option because if we don't doubt that, we don't move water off the west side of the lake where the water quality is dramatically better than out of the east end of the lake, where an uncontrolled release would occur. it's very hard for people to get
3:51pm
their minds around the water quality out of the east end of the lake is five times worse the water quality out of the west side of the lake. so if there is an uncontrolled release of water out of the east end, we will face extremely serious consequences downstream. so it just makes common sense to release more water. were already releasing more water out of the west end to a state operated outlet, but were constrained by water quality issues. that simply must be addressed. and we must also construct the structure on the east end to prevent an uncontrolled release that would be an absolute catastrophe. now some counsel -- let's just have similar meanings and will enter into more discussions. there's no time for that. we are now on a timeline. this next spring, the kind of many walk-in, which is on the edge of the lake now, when all
3:52pm
this started with eight miles from the lake. now many walk-in is virtually in the lake. so i know that you are not yet confirmed, you're not in a position to influence the outcome of facially of this report aired i just say to you, destiny is a matter of extraordinary performance to the people that ever present and to me. >> senator, i remember the issue well from when i was at omb the last time i worked with you as a delegation on issues related to double slake at the time. and another is a commission working on it, but i've not been involved with the commission. so you may know more than i do about where the commission is having. but i will look forward to continuing the conversation with you. >> they've committed to issuing a report by the 20th of this month. and it would be an extremely serious matter if that is not an
3:53pm
aggressive approach to dealing with this problem because you know cow were passed the point of more conversations. we need action. it is absolutely imperative that be done in the interest of everyone, those in the basin those downstream. and we had a meeting here with the mayors of all the affected communities come with the governor of the state and we were unanimous in our decision come unanimous, very rare in today's legal climate. republicans, democrats, local officials, county officials, state officials, local delegation absolute with respect to what has to be done. with that, i went to indicate to members that we'd like all written questions to be submitted by the end of business today. it is my intention that we move this nomination as expeditiously as possible. we have a 48 hour notice
3:54pm
requirement. i'll be visiting with senator gregg about when we get that notice, but it's my intention we will vote on this early next week. i think all the members or their attendance today, for their interest, for their courtesy. i think jack lew for his willingness to serve. we certainly appreciate that and for his family as well. hearing will be adjourned. [inaudible conversations] [inaudible conversations]
3:55pm
[inaudible conversations] [inaudible conversations] [inaudible conversations] >> next, president obama announces his selection of elizabeth warren to set up the
3:56pm
consumer financial protection bureau, which is part of the financial regulations bill signed into law in july. then, outgoing bp ceo tunney hayworth testifies in a london -- tony hayworth testifies in london on ongoing safety measures. sunday, author and christian science monitor correspondent on why he believes the nation is experiencing severe economic and social anxiety. then the hot line editor and chief examines senate candidates who gained victory with support from the tea party. following that, a look at america's changing view of what
3:57pm
constitutes a family. a new survey found that americans are more accepting of unmarried couples or same-sex couples raising children. >> this weekend, the conflict between the first amendment and national security. our author is interviewed by the former u.s. attorney general. the c-span networks. we provide coverage of politics, public affairs, nonfiction books and american history. it is all available to you on television, radio, online, and on social media networks. find our content online at any time at the c-span library. and we take our content on the road with our c-span the bus. washington your way, the c-span networks. now available and more than 100 million homes. created by cable, provided as a
3:58pm
public service. >> yesterday, president obama announced elizabeth warren as his choice to set up the consumer financial protection bureau, which is part of the regulation bill signed into law in july. elizabeth warren is a harvard professor who was created with the idea of creating a consumer watchdog. she was also tasked with overseeing the troubled assets relief program. >> before we begin, i just want to mention a report that was released by the census bureau yesterday about what happened to wages during the last decade. it revealed that between 2001- 2009, the incomes of middle- class families fell by almost 5%. i want to repeat that. between 2001-2009, the incomes
3:59pm
of middle-class families fell by 5%. in the words of today's "wall street journal," this lost decade was the worst for families in half a century, a decade that obviously ended in a devastating recession that made things even worse. we know that a strong middle class lead a strong economy. that is why as we did our way out of this recession, we are putting forth policies that grow the middle class and provide a ladder for those who are struggling to join it. that is why i am urging the leaders of the other party to stop holding middle-class tax cut hostage and extend this relief to families immediately. they need it. they need our help.
4:00pm
that is why we are here today. part of what led to the financial crisis and -- work practices that took advantage of consumers, particularly when people were deceived into taking out mortgages they could not afford. they have often used fine print to take advantage of american consumers. we have seen banks charge on reasonable overdraft fees, credit card companies hit folks with unfair rate hikes, chief initial monthly payments that later skyrocketed.
4:01pm
all this has cost middle-class families billions of dollars -- tens of billions of dollars, that they could have used to pay the bills or make the mortgage or send their kids to college. i have to say, when michele and i were first starting our family, we had to navigate a lot of these financial decisions, whether it was buying a first home or paying off our college loans or putting a lot of debt on credit cards. obviously we were better off than a lot of families, but we still often found ourselves confused or finding ourselves in tough situations of consequence. we have a pretty good idea. i have, personally, a good idea of how this can be difficult and sometimes confusing for the average consumer. that is partly why, even when i was still in the u.s. senate, i took such a great interest in the work of the woman standing
4:02pm
next to me. i have known elizabeth warren since law school. she is a native of oklahoma. she is a janitor's daughter who has become one of the country's fiercest advocates for the middle class. she has seen financial struggles and foreclosures affect her own family. long before the crisis hit, she had written eloquently, passionately, forcefully about the growing financial pressures on working families and the need to put in place stronger consumer protections. three years ago, she came up with an idea for a new, independent agency that would have one, simple overriding mission -- standing up for consumers and middle-class families. tahnks -- thanks to elizabeth's efforts and the dedication and persistence of the person to my right, secretary of treasury geithner, as well as leaders in congress like chris dodd and barney frank, that agency will
4:03pm
soon become reality. the consumer financial protection bureau, which is one of the central aspects of financial reform, will empower all americans with clear and concise information they need to make the best choices -- the best financial decisions for them and their families. never again will folks be confused or misled by pages of barely understandable fine print which you find in agreements for credit cards or mortgages or student loans. the bureau is going to crack down on the use of practices of unscrupulous mortgage lenders. it will reinforce the new credit card law that was passed banning unfair rate hikes and ensure that folks are not unwittingly caught by overdraft fees when they sign up for a checking account. it will give students who take out college loans clear information and make sure that lenders do not undermine the
4:04pm
system. it will ensure that every american receives a free credit score if they are denied alone insurance.an or it is the toughest financial protection in history. getting the agency off the ground will be an enormously important task, a task that cannot wait. that task is something that i have asked elizabeth to take on. secretary geithner and i both agree that elizabeth is the best person to stand this agency up. she was the architect behind the idea for consumer watchdog, so it only makes sense that she should be the architect working with secretary of treasury geithner in standing up the agency. she will help oversee all aspects of the bureau's creation from staff recruitment to designing policy initiatives to
4:05pm
future decisions about the agency. she will have direct access to meet and to secretary gunnar. she will oversee a staff -- direct access to me and to secretary geithner yo. she will oversee a staff. she will also help me in choosing a director. i also want her to have the role of white house advisor as well as adviser to secretary geithner on consumer issues. elizabeth understands what i strongly believe -- that a strong and growing economy begins with a strong and thriving middle class. that means every american has to get a fair shake in their financial dealings. for years, financial companies have spent millions of dollars on their own watchdogs -- lobbyist who look out for their interest and fight for their priorities. that is their right.
4:06pm
from now on, consumers will also have a powerful watchdog, a tough, independent watchdog whose job it is to stand up for their financial interest for their families' futures. i am proud that we got this done. i am equally proud that elizabeth warren will be helping to make her original vision a reality. we're extremely proud of you, elizabeth. good luck. >> thank you. thank you, mr. president pierre >> thank you. -- thank you, mr. president. >> thank you. >> have you not bypassed your of 40 by making this appointment -- your authority by making this appointment? [unintelligible]
4:07pm
>> welcome to the white house. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2010] >> in a moment, outgoing ceo tony hayward testifies in london about the oil spill. after that, more about the oil industry in global energy supply with remarks from the president and ceo of the houston-based marathon oil corporation. later, at today's weekly addresses with president obama and oregon congressman walden. >> earlier this week, outgoing be pc o tony hayward testified before the british energy and climate change -- bp cdo tony hayward testified before the british energy and climate change committee. he denied claims that they contributed to the gulf of mexico oil spill. this is one hour and a half.
4:08pm
the report we implemented them across our worldwide drilling operations. -- >> we implemented them across our worldwide drilling operations. we expected them to be widely adopted. is is -- i emphatically do not believe this is the case. the need to mitigate risk associated witoffshore drilling is an industry issue and one i believe we all need to address. it is tempting to call for drilling bans. i think that is wrong given the world's demand for oil and gas. prior to this accident, the industry drilled for more than 20 years in deep water without a major accident. we should take a rational approach to this. we need to make sure the lessons are fully implemented across the world. there are for strategic actions this committee should consider in the u.k.
4:09pm
confirm things are working as we intended. enhanced testing protocols on blowout preventer, including the backup systems. enhance relief planning. ladies and gentlemen, thank you as for your -- for the opportunity to say these words. >> when you were appointed chief executive three years ago, he said he would be a laseright on safety. during those three years, we have had the biggest oil spill in u.s. waters and 11 deaths. last year, five of york north sea installations failed to comply with the emergency regulations. the offshore inspection records
4:10pm
said you had not applied with rules or regular training on how to respond to an incident. it also says that inspectors from the department of climate chan say you've failed to conduct exercises adequately. why should this committee to conclude that bp is a responsible company to operate deep water wells in u.k. waters? >> that may address that question in two parts. the first in terms of what we have done over the last 3.5 years. we have made safety regulations the mber one priority. it is about what we do under neath the banner of safety and reliable operations. safety is about three things.
4:11pm
it. a ballot [unintelligible] people and process. we have invested into the integrity of our programs. we have alsostablished safety operations integrity group. we have recruited outside of the industry from the petrochemicals industry and the nuclear industry. we havedded thousands of engineers to our operations. we have established new processes around the company including one designed to assure that our operaons are safe. it is undeniably a fact that because of all of that, this constituency is so devastating to me personally because we had made an enormous amount of progress in that three years. . if i could take the question of
4:12pm
the north sea -- we take all safety issues very seriously. i do not believe that the issues reported this morning point to any fundamental problem in our north sea operatio. we have a very strong track record in the nor sea. it is better than the industry average. we have seen major improvements in the course of the last three years. spills or a good indicator of safety performance. they have fallen by 20% over the last two years. i will ask for further comment on the north sea, but i think it was commentary this afternoon from the ecc thataid nothing that they identified compromise
4:13pm
the overall integrity of installations. >> thank you. as tony said, we take observations like this very seriously. we welcome the opportuty to improve our busess, specifically in those two areas you mentioned, specifically training. there were less than 10 people who had undergone a mostly refresher training. it was an administrative error. clearly today all of our people are complying with that training requirement. beyond that, we have taken action to make sure that that initiative error does not occur. the second point you raised was
4:14pm
on the matter of drills or how practice for spill response. we had been carrying out and continue to carry out exercises for how to respond. i think it is fair to say that there was some confusion within the industry as to what was exactly required within those drills. i think it is reasonable to say that the confusion was recognized by the regulator. in august of this year, the regulator issued a clarification and guidance on what exactly should be carried out when those exercises are undertaken. clearly today we aren full compliance with what is required of us. >> in the effort you have been making over the last three years, was or decision to have
4:15pm
anyone -- was that decision taken to save money and therefore -- >> we have found nothing in our investigation that suggests -- the blowout preventer was fully compliant. it should have options. the fact it did not function is something that the industry needs to understand and ensure direct actions are taken to ensure that equipment erupt -- equipment operates as it is designed to.
4:16pm
the fact is, it operated as it was designed to. >> was an effort taken to save money by bp? six day before the explosion, why did your staff dcribed the well as the nightmare well? >> there are chilling challenges with that well. they have to do with a gassing flux at a higher elevation. i think the description is unfortunate. the well had been challenging, not unusually so.
4:17pm
the gulf of mexico is a more challenging jelling environment than any other part of the world. >> on the working of the blowout preventer, it should be failsafe. it did not seem to fail in a safeode. was that a misunderstanding? >> there are three memos for the operation of the blowout preventer. the first is when th well is connected. if the rate becomes disconnected from the blowout preventer, the deadman function should activate
4:18pm
the blowout preventer. the third mechanism of activating the blowout preventer is through manual intervention. in the case of this accident, all three mechanisms failed. >> it was contrary to recommendations by the u.s. minerals management service. we recommended -- there was the
4:19pm
decision to install a single, long string casing, rather than individual casings, contrary to your own individual plan of april. bezoar all operational decisions. when you look at them together -- and these were all operational decisions. when you look at them together, they are quite unfortunate. >> i would like to address each one of those issues. i think it is important. what did and did not cause the disaster. >> it doesn't really matter if any of those caused the accident. it is more about the principles that the recommended approach -- >> let's take this one at a time. the flow was up the production casing per it was not around the side.
4:20pm
in decision to run the long stream was -- if you use a line with a time bank -- or the type that connects to the rest of the casing is subject to degradation and can leak. we have a lot of examples of exactly that occurring in the gulf of mexico. the practice of theajority of the industry today is to run a long streams to avoid the possibility of degradation between the tieback. the decision not to run at the cement was because they believe they had demonstrated that the cement had been effective. conduct a positive test, will
4:21pm
oil flow into the formation? then we can get a negative test rate we note with the benefit of hindsight that the negative test was erroneously misinterpreted. they believe that it was good. therefore, they had a good cement job and there was no need to run the cement bond work. it is used to determine whether you have a cement problem. it cannot determine pin prick holes in this segment. it identified correctly that the negative pressure test was wrong trade it was very light -- likely they would have run to determine whether additional cement -- cement needed to be place. >> the problem was with the
4:22pm
cement. could that problem crently exist on any of your other wells? >> we clearly have taken a lot of action to clarify and provide much greater rigor and around the assessment of the negative pressure test. ibp, we have been very prescriptive about what does and does not constitute a negative pressure test and we have elevated the authority to say that it is acceptable in the event that there is any ambiguity. >> do you applied the same safety standards -- safety standards to all of your erations worldwide? >> we apply the same standards. but they are influenced by their relations in the -- none >> standards apply in your current operations in the u.k. are to the same stdards that you
4:23pm
apply -- >> they are very heavily influenced by the safety regulations in the u.k., which we may wish to discuss at some point. the standards in the u.k. are driven by safety regulations -- they are very different than the ones in the u.s >> do you operate lord standards in the u.s.? >> we have the same standards, but there are differences in the ratings regime spread there are different requirements. >> you tald about one of the problems was human judgment we have before us last week transocean. he said that there was a chain
4:24pm
of command would then his part of the company. he saidhere was a time out period. aryou suggesting that there was a call for a timeout that was neglected? he is aware of the dangerous. are we led to believe that when a timeout is called, it happened each and every occasion? how the reports identified anything different? >> anyone at any level o a drilling facility. there is no evidence from our investigation that anyone at any moment in time pulled a timeout. in the negative pressure test,
4:25pm
the bp well site required to be taken again. it was taken again. the conclusio was that they had a good test ban could proceed. >> i did not understand when you talk about -- surely, that would have been tested. >> the back trip that was flat was in the blowout preventer at 5,000 feet. -- the battery that was flat. the last time it had been tested was prior to being put on the seabed. what we have to determine is exactly what was tested at the time the blowout preventer was last put on a sebed. >> what we have done is as soon as these things came to light,
4:26pm
we have implemented across our global drilling operation, a program to ensure that the equipment will do what it is designed to do. in a number of cases, that has required us to halt the killing and bring the blowout preventer to the surface. we have done -- hold drilling and bring people out prevented to the surface. -- bring in the blowout preventer to the surface. everything that we have in operation today is working as it was designed to do. the second thing we have done, which i believe is significantly enhance the testing process of blowout preventers. insuring that the backup systems work and are tested in the course of drilling a well. previous to this, they were only
4:27pm
tested at the end of each well. >> there, and the work was completed -- and they were confident the work was completed. it seems like anybody else in your position is responsible for signing off on that. i wonder what your doing new or differently to ensure that what you do sign off on four of the providers you are satisfied with -- a sign off on with that other providers you are satisfied with.
4:28pm
into the well. there is no doubt that this was -- exactly w it was is not clear. we have not been able to complete the investigation in that area because we have not had access to the cement. " we have done -- what we -- we have simulated it, but we have not gotten a sample. we need to b cautious until we can complete that analysis to understand why the cement failed. what we have done is to required that all cement contractors have first party verification of their standards and procedures, a cement formulas, everything around the cement. it is a new -- it as an enhancement to previous procedures.
4:29pm
>> they can verify that the mixture is correct? >> this wanted to follow up on the recommendations. there is a lot about how you need to change the conditions you apply -- in terms of how the industry performs, a lot of things that used to be in house are now provided outside. that involves a lot of small operators. is there a lesson that the industry needs to learn about having the same culture -- a culture throughout the contract?
4:30pm
>> it would be surprising given the nature and the gravity of this accident if many in the industry would not look afresh at the relationships between themselves and their contctors. i know bp well. i think it is too early to conclude exactly what the changes will be. in our reports, we talk about -- it is possible that it may go beyond that. some of the things may come back into bp. but i think we need to be quite critical of of doing that. the reas the industry is involved in the way that it is and it goes back 20, 30 years, the idea of creating skills and a narrow space. we need to be certain that if we bring things back in, we reduce the risk. the industry will look very hard at the nature of relationships between operators and contractors in a number of the
4:31pm
mansions in lit of -- in dimensions in light of this tragedy. >> having read the summary in terms of the substance, i was looking at looking at -- i was interested in looking at the technical side. there was very little reference to anything to do with the nagement of contractors, how you manage. from the recipe -- from the report, you will say that you are now looking blowout
4:32pm
preventers. are you doing more than that? are you looking at risk assessment? are you looking at management structure? it struck me that you can always look at the technology and engineering, but ultimately, it is people and shareholders to end up being responsible. >> in defense of mark, the investigation was launched to understand what happened and to make recommendations relevant to the immediate cost. what bp is looking at -- the issue is the management of local ability. this risk was identified at the very top of the bp crew. it was identified as a principal risk in the production business.
4:33pm
yet it's still crystallized. we clearly have to ask ourselves what more can be done in managing the general question of management of -- we have to keep reminding ourselves that the industry that drilled for 20 years in deep water without the blowout. the believe that we mitigated the risks. >> if we could move the risk assessment, what is your prime risk issue that you are looking at when you are looking into operations? >> can i just make a couple of comments? it is important that is all the lessons learned need to be applied. there are some important differences. the first one is that there is no where -- the reservoirs'
4:34pm
have high pressure and high temperatures. it occurs in shallow water. it is in the central north sea. in the deep water, there is no high pressure and high temperature. it means that it was a very different challenge. the strength of the ratings the regime here. the north sea had its own disaster 20 years ago. as a consequence of that, the safety regulations was fundamentally changed. the: reports provided the foundation for extraordinary regulation of the last 20 years. i think those are quite important. >> my party in the north sea is
4:35pm
very clear. it is the number one thing. if you come into our office, you will see it on the walls and screens. the number one priority is and has been the reduction of hydrocarbon it releases. the reason for that being, not just in a risk or in safety or in business, it is that priority in the business. the reason is, as we have seen in the gulf of mexico, the consequences of its going wrong are significant. for that reason, we have focused on back priority over the last several years. the first thing is to declare th it is the most important thing. we have done a lot of work on education in this space and helping our work force. there is a facility in the u.k. that helps people see what
4:36pm
happens physically in an explosion. it is very -- it helps people understand the strength of what can happen. we have invested in maintenance and inspectn and our facilities to improve the integrity of our facilities. i am pleased to say that all there is -- we must -- we have made significant improvement in the last two years. that track record continues this year. the reduction of hydrocarbon releases -- is the thing that i worry about first in the morning and last in the evening. it is the thing that when it goes wrong, people can lose their lives. that is why we focus so much on edge. -- so much on it. >> [inaudible]
4:37pm
what should have happened? >> let me start. the primary measurements of a drilling operation is the pressure and volume of mud. those are the two most important that are monitored and measured on a continuous basis. if it is increasing, it tells you that something is going into the well. if it is decreasing, it tells you that the money is flowing into the formation. -- mud. they are monitored on a continuous basis in the drillers control units. >> in addition to that, there is another service provided on the
4:38pm
drilling rig. this service also monitors those parameters to provide a set of eyes on the data. it was important finding in the investigation that the influx in this well occurred over several tens of minutes leading to the explosion. that is counter to what you would expect to see. if the fundamental practice is early detectionnd early action and for some reason, that was accomplished here. >> [inaudible] >> but the report has been able to do is identified that the signs were not -- some of the equipment was available. we cannot say it all was at all times. we captured that with real time data. there is record of the
4:39pm
information that has been available so we know that was there. we cannot explain why they did not see it. >> it was up to 40 minutes. the you have concerns about the training of your resources? what is going -- what are you doing to rectify the situation? >> the recommendations that we have made are to consider enhanced training. there was industry staard training. all the people who were close to this, we were concerned that they were up to date and have the appropriate training. the recommendation that we made to the company is that we should consider superseding that and going further with training and competency. the other thing we recommended
4:40pm
is that this is almost something thatou could take for granted because it is such a common practice in the industry. let's go back and absolutely define what the minimum requirements are for well monitoring. ile we could not get to the to the bottom of it, we stepped back and made recommendations to make it more robust anyway. >> i have a family member [inaudible] >> [inaudible] you report does not to be --
4:41pm
show any evidence of that parade i wonder why that was the case. -- evidence of that. i wonder why that was the case. >> we wanted to understand the sequence of events, remembering that at the time it was a horrific incident to look at. we went to understand what were the chain of events that happened and what were the immediate costs is so that we could get some insight as quickly as possible. that is what we have done. i think it is a good contribution to develop understanding. there may be more to do. >> on the basis of that, does bp had any -- is it a series of threats? >> i think it is important to
4:42pm
consider a the things we have identified and recognize that any one of those could have prevented or significantly reduced the impact of the incident. there is a way to think about each of those and how he would strengthen that. the recommendations that we have made are targeted at exactly that. thinking through what steps you could take and a range from consideration of engineering design, consideration of improved standards and practices and procedures realization of the things, and consideration of paul you -- of how we up our game in ensuring that we gets quality there. those are the broad themes. >> i guess what i am trying to get that -- even to insure
4:43pm
safety record. you mentioned that straightaway. are you still dealing with that legacy? and are used to working through that? >> i think it is very dangerous. it may beat -- not be appropriate to join up. i do not think we have any evidence there of the sort of issues that we were confronted with in texas. but we do have very clearly is a lack of rigor and oversight of
4:44pm
the contractors' trade the contract is we're using your -- you may not expect that they would need that quality of oversight. but it is clearly something that the report make strong recommendations around. it is something that we have already taken action on. including the waiting for the reports be published. including the oversight that we apply in the operations. that is a legitimate concern. i do not believe that it is back to the issues that week -- >> and [inaudible] >> this rept satisfies our
4:45pm
terms of reference. >> it is close to home. are there plans in place prior to the incidence? >> i think it is evidence and we have certainly acknowledge it that the industry was not prepared. we believe that we had effectively mitigated that risk. that was not the right conclusion. over the course of the last four or five months, we have built an enormous amount of capability.
4:46pm
it would allow you to cut away and put a cap on a blue not well and contain it. -- a bellona out well. -- blown out well. we are shipping to of those kits -- capping structures across the u.k. to be based in south hampton at the oil spill response center as the beginning of creating the capability to be able to intervene if such a situation to occur. that does not mean to say that there is no lack of focus on mitigating that risk and ensuring that it does not occur, but as the industry fully -- industry in the u.k. is moving forward to create capability to deal with it blowouts.
4:47pm
the first of that is to bring to of the multipurpose capping equipmt to the u.k. to be based in southampton. >> i am a practicing medical doctor, whistleblowing is difficult. it strikes me that most people are under contracts. the think that it is a problem in terms of reporting concerns? -- do you think that is a problem in terms of reporting concerns? for the sake of the industry's
4:48pm
reputation, that they would be -- at the moment, potential conflict of interests. >> there are a lot of things that could be done. we found no evidence of anyone being under any pressure to do something you di not want to do. he testified under oath, he is the ultimate authority on the red, he said that at no time he felt he was under any pressure to reduce costs or to go quickly. as far as he was concerned, he was the accountable person. he makes those -- was a tempting
4:49pm
to believe that this was caused? there is no evidence of that whatsoever. >> maybe in terms of management and reputation of the industry, you might want to consider that. >> both of which are legislative requirements. the first is the requirement to have a group of people who are volunteers. it is a legislative requirement. their job -- when i go offshore to our facilities, i too often meet with them at independent of the management of the facility to understand if they have issues with the management, if
4:50pm
they had issues they want to brg to my attention. that exists today. the other thing you will see when you travel to an offshore installation is people are encouraged that people have direct access to a hot line should they wish to raise concerns. people do use that facility. there are the thing today -- i just wanted to make sure that you knew what was in place in the north sea today. >> you are upset that there could not be any hydrocarbon spillage. he did not have a recovery mechanism in place. i am concerned about [inaudible]
4:51pm
there was a presumption that to -- in some ways, it is important that we learned less than from the gulf of mexico. you start opening up a lot more and revisit some of the risks. we are talking about idifferent areas. i would urge the industry to look again and not to dismiss something because it s never happens or believe that we have -- these disasters could start to increase around the world, not decrease. >> i agree with you completely.
4:52pm
>> either we have a technical solution or have it -- or it has not happened. >> i completely agree with you. the occurrence of seems to be more often than not theseays. we are lookingery carefully acss the company and the local ability that we believe we have effectively mitigated break not st t extent of the medication -- mitigated. not just the extent of the mitigation. >> the capt. technology --
4:53pm
deepak and technology is impressive, but is it the right lesson in terms of not to have a blowout preventers really do failsafe so that you do not have to have the cap containment. >> that is the right approach. you have seen the reports and you heard what i said about the action that has been taken on blowout preventers. i would expect that to the changes will be made to a blowout preventers as the industry moves forward to further ensure against anything further. >> page 48 of the report, you identified the three options.
4:54pm
the third one suggests that the assembly was -- that is why it did not operate. >> this was their explanation for one of the reasons why it did not work. what this stems back to is that we strongly believe that during the intervention activity, and they did take an action that managed to close. it did not stop the flow from the well. at the time the report was written, we could not determine the specific reason for the failure mechanism. these three were identified as the most likely possibilities. this is one where we may learn more about as the equipment is taken out and basically did constructed.
4:55pm
this is one where there may be more information on. >> i want to go back to the point you were making about people feeling under pressure. in the context of the north sea, -- >> i do not believe we have any evidence of it at all. >> i think people are clear on our priorities in the north sea. i see no evidence of that in my time in the role. it is something that -- it is important that people feel that they can do two things. one istop a job if it is happening. and secondly, not feel under any pressure that they cannot say
4:56pm
something to someone. that is something that when i go offshore, i test. i talk independent of the management of that facility to the people who are volunteering their time to be safety representatives. i sit down with them and these are the questions that i ask them. that is at the root of our safety culture. i have not seen any evidence of that. if i did, i would take action. >> i expect that to, when you are talking to these people, perhaps their responses may be slightly different. going back to this point about the safety record, i accept parts of their reports.
4:57pm
how can you ensure there is consistency across the whole of the company and your contractors that the safety is at the heart of everything? >> the first thing is ensuring that the management will talk. and is not only about saying it, but doing it. before we invest anything, we invest in safety. it is about making certain that we have the right capabilities. it is about having the right environment so people feel they can speak up and raise their hand if there is something that they are not happy about with respect to safety. we were discussing that over the
4:58pm
last four years, we have implemented a management system which is designed to ensure that all of our operations are conducted to the same high standard and there is the same look and field to the safety of those operations everywhere in the world. > do you operate on your rigs in the north sea? >> we are fully complnt that the trade association has wi the unions and the work force and we have no issues withhat policy. it is fully in place and our operations today. >> you have brought to the structures to the u.k. -- two structures. how long will it be fore we
4:59pm
can have confidence that the industry in the u.k. has a routine procedure in plan to deal with something? >> the plan is to build that capability over the sexed -- six months. >> thank you. >> moving away from the technical side, are there any aspects of public create -- public relations handling that you regret? >> i think there are many things that i would do differently if i had the opportunity to again. but i think it is also the importancehat we all understand that given the scale of this tragedy and the enormity of the disaster, emotion and anger in the united states was
5:00pm
very high and quite understandably so. therefore, it made the whole public-relations area extraordinarily difficult. >> do you consider that you were irly treated by the authorities in the united states? >> there was an enormous amount of emotion and anger. it was very understandable. >> does that suggest that you were not fairly treated? >> it was causing immense stress and distressed to thousands of people. >> their reaction from the administration? >> their reaction was entirely understandable. i would like to be very clear that bp had and then stored in -- extraordinary constructive with the government -- -- relationship with the government of the united states.
5:01pm
the largest spill response ever seen by a -- others in history will be determined. it was the largest response of its kind. that required tremendous cooperation. >>ow many countries around the world does bp operates in? >> around 30. >> have any of those countries attempted to interfere with your dividend policy? >> the united states government did not interfere with the dividend policy. our decision to suspend the dividend was made by the board of bp at the height of the crisis, where our financial liabilities and extreme
5:02pm
financial prudence was warranted. it was a very painful decision for all those who were involved in making it. it created an enormous amot of pain and short-term to our shareholders. but it was taken by e board of bp in the interest of presving that the financial strength of the bp and the long- term interest of shareholders. >> bp was not influenced by any way of the comments of the president? >> it was all to do with looking at the liabilities that we could see coming towards us and insuring that the company's balance sheet remained strong and robust and we were able to deal with everything. i think there is political risk
5:03pm
to operating in those jurisdictions. >> many people would say, nigeria or somewhere might be riskier than the u.s. >> i think that is a pretty fair assessment. the think you were treated by the british press fairly? most of the headlines were -- said that bp was blaming everybody else. how do you respond to that? >> not a consequence in the
5:04pm
matter of report. >> you take l rot -- you take all responsibility? >> we were a responsible party. we had an obligation to stop the spill, which we succeeded in doing. we had an obligation to clean up the oil. we had an obligation to repeat any environmental damage, which we will do. we had an obligation to compensate those who read been affected. the report was not desert -- not designed to apportion blame. the report was designed to point to what happened and to ensure that those learnings could be applied across operations. >> i think you are a sang -- you
5:05pm
have the drilling operations here. did you say that the press was there in his response? >> it was what it was. >> can i take you to u.k. deepwater drilling? >> [inaudible] >> what we're talking about a deepwater drilling, a popular
5:06pm
supposition in the u.k. is that we are not talking about deepwater to the same extent as the gulf of mexico. you have the experience of reasonably deep water. what experiences have you already learned from both exploring and drilling in this field? >> those fields were found in the late 1990' we have been active and developed in the late 1990's. we have been there for 20 years. with a very good safety track record, would note incidences' or major actions -- accidents. the water is deeper than the
5:07pm
rest of the north sea. the temperatures are relively low. he did not have the juxtaposition of high pressure and high temperature. business has been welcomed. >> you mentioned that the pressures and temperatures are lower. is that something you would extrapolate across all fields or is it something that is an unknown? >> but we do not know, we do not know. we can extrapolate in the areas
5:08pm
where we drilled. there is the possibility that higher pressures and higher temperatures make it a possibility. its a possibility. >> you are intending to more deepwater drilling later this year? >> we have not made a decision yet. >> do you have any evidence as to what you might find? >> the water is deeper. >> the projections on pressure and that while are similar to the predictions that we would have -- they are about half the
5:09pm
pressu that we experienced in a well in the deepwater of gulf of mexico. that is very similar. the pressure is roughly half. we do not have that combination. the geology is different and we do not have that combination of water depth and pressure that we experienced in the gulf of mexico. >> on your plan for the north u.s. prospect while -- well, what would be the status of the blowout preventers? >> we operate at a moment's --
5:10pm
what we do prior to taking on any new rig is go through a very comprehensive audit system where we established the condition of the rig, the track record, the confidence of the people. we will be looking very closely when we bring in a third party company who looks at that block out prevent her and confirms that is -- itorks as it is intended to work. >> [inaudible]
5:11pm
i was in the process of talking about the plans for exploration drilling in the north u.s. prospect and what your plans for sure cutters -- sheer cutters were and what you have in place? >> we have a prospect in the deeper waters. we are not drilling that prospect this year. we will likely draw that to next year. the types of rigs that can operate and that water tend to be dynamically positioned. they tend to be new are. they tend to have more than one one -- we do not have a rig
5:12pm
identified that we will use at this time. we have standard equipment that is used throughout the industry. he alluded to what we now do consequent on the accident in terms of how we look at a blowout preventers. if the blowout preventer has operated as it was designed to, as it was intended to, the consequences could have been very different. that is why we have taken the steps to give an additional level of assurance to what we had in place, where we bring in a third party. to say that the existing fleet operates as intended and operate as they are designed.
5:13pm
going forward, every time maintenance is carried out on that bop, we will ensure that there is a third-party, independent company on back to -- on thaat rig. that is a very important thing that we will do. the second thing we are doing, which we believe is very important, is the -- is testing the secondary systems. one of the things you do it is in the event, you have a remotely operated vehicle that connects itself to be -- to operate that.
5:14pm
we actually simulate that and we do that today on service with the same kind of pressure and the pump to confirm that if that secondary system is needed, it will operate as we require it to. those are some of the things that he alluded to in his opening remarks, they may have more impact across the industry. >> what would you say is one of the lessons? >> what we have to do, i think, and mark's report makes it clear, -- it is an area where there are some unknowns remaining. the plot out printer has just been recovered. -- the blowout preventer has just been recovered. what is important is that we take action in the near term to
5:15pm
ensure that systems work as intended. if they do, they will operate and do what we expect them to do. there is no doubt that the industry will work harder at the design of the bop itself and what can be done to it to enhance its reliability. >> we will run through until about 5:10. >> there is a time scale involved. a multibillion-dollar industry like this, for the layperson, it
5:16pm
seems extreme. do not understand the frustration and anger? not just from the american senators and congressmen, but the people who care about the environment. two-thirds of the whole spillage is gone. i just find the whole thing a lesson to be learned, it is our greatest, -- it is outrageous, honestly. >> i understand why people feel the way they did. there is no doubt about the
5:17pm
inability of bp and the industry -- it was not properly prepared and it was unacceptable. what we did was to -- or strategy was around partial containment, complete containment. we pursued them from the very beginning. we implemented as the crystallize the engineering around it. the truth is that it took longer than any of us anticipated. the industry was not prepared because it believed it had mitigated the risks. that was a very bad assumption.
5:18pm
>> the layperson would think that you have this thing sitting on the region. i am talking about an experienced area. >> there was no new science, a lot of new engineering. this sort of engineering has never been done before. in doing it, we created an enormous amount of lessons for the industry. if it is ever required again, at the industry will be far more far -- quicker and to intervene. i do not want to defend the industry.
5:19pm
when something like this happens, it is not defensible. we had been doing these operations for 20 years. we drilled more than 5000 wells all over the world and had a very strong track record of no accidents. >> that was in hindsight, wrong room. -- wrong. >> but you say that the industry placed a lot of blame on bp and said it would not happen to them. how do you respond to that? >> i think it was understandable given what was going on in the united states. i think it has been made clear that this was not an issue of well designed. >> what about bp in the way that
5:20pm
its structures its finances. you?ave insurance, don't >> we do. >> [unintelligible] d used think that we should be here-do you think that we should be involved here in very large engineering without dave true barometer of risk and ability to assess safety? >> the reason bp has moved to the southern shore, which occurred about 20 years ago, was that we found that the insurance market was not deep enough to cover the risk. and when it was, the premiums far outweighed -- we looked at a
5:21pm
15-year time frame of the claims verses premiums paid and it was such that the premiums were far greater than any claim ever made. >> i think this issue is a measure of risk. the premiums are very expensive, but that is -- and that is the barometer of the risk that you are taking. >> that is true. that is one measure of risk. if there are many others. it is also a measure of the death of the insurance market. -- debt of the insurance market. >> we touched on a financial incidents, those that depend on bp for their investment. but also, those that rely on
5:22pm
what bp is doing. it's what local ramifications are there of bp's operations in the north sea of having to meet these obligations? with our investment in the north sea, we have a very -- >> our investment in the north sea, we have a very significant investment program there, 12 billion pounds in the next five years. that is not in any way affected by this need to restore financial strength of bp. >> is it true that two weeks after the explosion that the president announced that bp was responsible? >> under the [unintelligible] it did not surprise us.
5:23pm
>> even though york are actual report said that responsibility is shared. -your actual report said that responsibility is shared? >> we believe we have there's possibility to deal with the incident, cap the well, clean up the oil, repudiate the environment. >> -- were mediate the environment. >> but you feel that you are responsible for the cross? >> [unintelligible] >> newfield that it was preempting due process? >> i do not feel it was preempting due process. in the first instance, it was very clear from the u.s. legislation that it was bp's responsibility to respond to this and i think we responded well. >> the british prime minister
5:24pm
said two weeks afterward you'd be paying for that? >> i'm afraid i was not in the country at the time. i was in china. >> with respect to the slow response, i've got this statement from bp released june 19. "our initial tests show that when we apply this persons under water, we have it -- we use a much smaller amount of this person then we need. [unintelligible] that kind of information might be helpful to other companies in the future." would you agree with that statement? it has a rather glib quality to it.
5:25pm
it is like a vast laboratory experiments on the deep sea oil spill. >> that is not what was intended. the facts are facts. what we found through the application of dispersants in the subsea environment was that the amount of this person that you had to apply was much smaller. and the reason for that was that the oil and disperse and were traveling through the water and mixing very effectively. it was rather like a washing machine. what i have to say about that was that no one knows today the environmental impact of this. we have a very substantial science program in place
5:26pm
measuring the water column and the marine fauna and flora to determine what impact there has been from the application of dispersants. i think is fair to say that time and science will determine precisely what environmental impact there has been. >> you also discussed the commission process in using the dispersant. but this person is designed to work in certain types of water. i cannot see particular deaths in your plan. i wonder what the ticket of process -- particular depths in your plan. i wonder what particular process you used with this plan.
5:27pm
did you know what the environmental impact would be? and that sort of level, that sort of pressure, you have a substance formed and you do not know what is going to go to the top and what is going to go to the bottom. there is a lot in play. is it possible to predict where this substance is it? how are you going to deal with that? >> i think is very important to recognize that the application of the dispersant was approved by the u.s. epa. of every application of it, whether on the surface or on the subsea, was some of s
5:28pm
approved. >> on what basis? you were essentially saying, we're going to try this, but we do not know what is going to happen. i just wonder how the u.s. authorities made that judgment. >> i think it was a belief that it was going to be more effective. it was a theory. it turned out that, indeed, that was true. the dispersants applied creed of the same effect as physical this version.
5:29pm
>> it was using it as a laboratory. i guess that was a bit of a scientific punt. >> it was a scientific guess that was applied and proving to be accurate. -- and proven to be accurate. >> [unintelligible] presumably, if you did the same thing, it would have the same effect. i wonder, do you have any prediction as to the heart come of that? >> the data that has been collected so far, there is no evidence of dispersants for oil entering the food chain. there has been a very extensive
5:30pm
program of sampling of marine flora and fauna. there has been no evidence since the 28 of july that any oil or dispersants have been detained in the water problem. since the 28th of july, all of the sampling that has been taken across the water column has not identified any residual oil or dispersants in the water column. >> it does struck -- strike me as an ongoing experiment here. it surprises me that there is no in burma to representative from bp here today. -- environmental representative from bp here today.
5:31pm
>> i think we have fairly significant environmental capability. there are a lot of lessons here. there are lessons in this accident across many dimensions. one of them is the area you are referring to, the application of dispersant, its effectiveness in mitigating an oil spill, and its impact on the environment. lots of good science will come out of it. i believe we should allow time and science determine exactly what the consequences are. >> you think there will be much more deep water drilling now? >> i think if you look at the world's demand for oil, today, the world produces and consumes
5:32pm
about 85 million barrels per day. if you look at the next two decades, that number is going to rise between 90 million barrels and 100 million barrels. that does not sound significant, but if you put that year to year, the world will have to increase oil production of to 10% -- up to 10%. it is projected to go up by 10% by 2020. if you look at the u.k., the u.k. imports close to 30% of its domestic gas.
5:33pm
the 65% of that gas is produced in deep water. in the u.k., we are dependent between somewhere between 17% to 20% of our domestic gas supplies from deep water. i believe that the deep water provinces of the world will be a very important source of oil and gas as the world makes it -- makes a transition to a more diversified industry. but it is a transition that will take decades. >> [unintelligible] >> it depends very much on the fiscal regime that his presence -- that is present. it is run more by a fiscal regime that it is by water depth. >> i was referring to the energy
5:34pm
consumed in recovering the oil. >> it is not going to be any greater than that of onshore or zero wells. in the deep water, where we are to begin producing fresh new foods, [unintelligible] >> is it true that under your leadership, [unintelligible] >> that is not actually the case. if we have actually increased our investment into other types of technology. we have focused into four areas. we have focused into wind, solar, biofuels, and carbon capturing sequestration in excess of $1 billion per year. in the last three years, significantly more than anyone else in the industry, and significantly more than we were
5:35pm
four years ago. >> and is that going to continue? >> of course, that is not for me to say now. but i believe it is very likely that the investment into alternative energy will continue. it is something that bp believes in, but we also believe that it needs to be commercial. >> right. may i present the idea that [unintelligible] how easy is it to adapt these preventers to have a configuration of these plans? >> i think it is fair to say that adaptation is not totally easy. i do think it is important to
5:36pm
keep coming back to -- if it had functioned as designed, there would not have been the accident. >> i wonder, given your recent experience, do you think it is safe, the licensing [unintelligible] do you think it would be better to have it all under one agency? >> i think they are clearly different. i think the separation of duties between safety oversight and license granting is very beneficial in the u.k. and is something that the united states has now decided to do. it is one of the yearly changes
5:37pm
that was made during -- early changes that was made during this accident prepare. i think it allows much greater separation of duty, much greater focus on one specific area. >> [unintelligible] astonishing, really, that you say we have got to learn from this. [unintelligible] and if it is linked to the fact that there is a moratorium in the united states, the norwegians have not issued any more licenses. reducing the -- do you think,
5:38pm
shouldn't the industry [unintelligible] i'm just astonished that the industry would say that we can learn lessons from this. certainly, we learned lessons from tankers. >> i was not implying that lessons have not been learned. but this was the first spill in 5,000 feet of water. >> [unintelligible] >> i would prefer to lead time and science speak to that one. it just is not clear today. >> the environmental impact is a consequence of this.
5:39pm
i support the british oil industry, but there is an environmental impact for all coastlines. >> the first thing is to make total lessons learned to ensure that this is mitigated -- this risk is mitigated. the second thing is to put in place the ability to respond far more effectively than bp was able to in the gulf of mexico because as you quite rightly observed, we were not prepared. and i think those two things, you can have confidence that in the event that something like this did happen, the environmental impact could be significantly mitigated. if >> is there anything else you would like to tell us before we close and? >> i would like to thank again
5:40pm
the government for their support throughout this crisis and to say that bp remains a very committed to exploration, development and production in the north sea and we intend to make absolutely certain that all the lessons that we learn from the gulf of mexico in all the dimensions that we discussed today artfully applied to everything we do in the u.k. >> right, well, thank you very much for your time and we will be producing our report briefly. we have got some security arrangements now. if we want the public
5:41pm
>> more now about to the oil industry. this is 45 minutes. >> we have found for over 50 years that this is a real partnership. for those of you do business with marathon oil, their values, at the sense of purpose, the quality of individuals, unlike most companies that exist today, i think once you hear from their
5:42pm
head today you will understand it. we are blessed from the gas pump to the board room to have extraordinary people. if you look out at the city of detroit, there are cranes, it is growing. they are providing some of the only cranes' better in our town right now. it is with a great deal of honor and privilege that i introduce the president and ceo of marathon oil. he has been in the oil industry for almost 40 years. today, he plays a vital role in all of our lives. this industry drives our country. clarence as one of the very significant players in that business, is critically important to each of our daily lives. he began in 1972.
5:43pm
he is the only geophysicist i think i know. [laughter] he graduated from louisiana state where he earned a bachelor's degree in geology. in 2007, he was awarded an honorary doctorate of humane letters. he rose through the management assuming moreco, i senior roles all over the world. he served as vice president of texaco and was appointed head of production in 1999. he joined us in 2000 as the president and ceo of marathon. he has led the company's continued growth with division, a keen understanding of complex challenging and ever-changing of oil and gas industry, and we're delighted to have him here today. we look forward to hearing his thoughts on a topic that is so relevant to each of us, such a
5:44pm
big topic of conversation among everyone since the industry has gotten so much attention. with the privilege of spending a little bit of time with clarence last night, i think you will find his remarks challenging, interesting, and probably surprising to many of you. over the last couple of years we have become friends, so i am delighted to introduce to you another wonderful executive from marathon oil company. [applause] >> thank you, and i want you to know that we feel the same way about the strong relationship. i really am honored and delighted to be back here again and to be able to speak at one
5:45pm
of america's great venues in a discussion of issues that are critical to both our nation and the world. i am pleased to be back here in michigan again, where marathon has had operations for more than half a century, a state where more than four hundred marathon employees and their families live, a state in which the company, my company, is investing very significant capital and creating good paying jobs here through the expansion of our refinery. at the outset, i want to comment on the deepwater horizon incident in the gulf of mexico which resulted in 11 tragic deaths, as well as substantial environmental, and ongoing economic costs. our thoughts and prayers are with the families of the deceased and injured workers, and all others who are being impacted by this incident. the facts are clear that this incident is unprecedented. more than 3000 wells have been
5:46pm
drilled in the gulf of mexico in the last 60 years, with more than two thousand of those in deep water. we have done that with out any kind of magnet -- with a done that without any kind of incident of this magnitude. but the reality is that the reputation and credibility of my industry has been damaged. we understand that, and we're taking steps to regain the public trust. we have a task force comprised of the world's leading experts working in cooperation with the thertment of interior and bureau of oceanic management to prevent, contain and respond to any other incident. many improvements have been developed and others are on the way. there have been two significant pipeline leaks, one on the kalamazoo river, and the other just outside chicago.
5:47pm
each year, billions of gallons of crude oil and refined product are transported safely through the thousands of miles of pipeline throughout the united states. while these recent leaks were not as large in scope as the gulf of mexico accident, they're taken no less seriously. our industry must and is redoubling its efforts for minimizing the potential for these incidents. i wanted to address these events and how our industry is responding right up front here, because fundamentally, our nation's energy security situation is at best unchanged by the unfortunate incidents like the deepwater horizon tragedy. however, the impact of that tragedy could be worsened if that led to policies to restrict or prevent my industry from developing our domestic oil and
5:48pm
gas resources in a safe, environmentally responsible manner. i am not speaking simply out of self-interest, but because these toources are vital coronations interests. resources,il and gas and the gulf of mexico in particular, are critical to our nation's energy future. in my brief time with you today, i would like to address one of the most important public policy issues facing our nation, and that is how we can achieve energy security and environmental sustainability, which in my mind are inextricably linked. there are three key questions that need to be answered. first of all, is there a shared goal or vision that we as a nation can all rallied around and get behind? secondly, what are some of the fundamental truth and reality is that we will have to deal with
5:49pm
in achieving that goal? third, what are the essential elements of the plan to get there? these are, in my opinion, the desired attributes. a diverse portfolio of increasingly cleaner forms of energy. that our energy comes from secure, reliable sources. that our energy production and consumption is environmentally sustainable, the we are able to minimize the impact to air, land and water. that our supplies are readily available and affordable so we can continue to grow our economy and have real economic competitiveness. lastly, that the energy industry provides millions of good paying, long-term, high tech jobs. i have flown around the country and discuss this aspiration with many people. there is a full recognition that
5:50pm
we need to transition as quickly as possible to more secure, sustainable energy. but then the debate begins. how do we get there? how quickly? all the while insuring that every day people have the affordable and reliable energy that they need, and that our economy can grow and prosper and provide new job growth. the debate will perhaps be more easily resolved if there was a full understanding and appreciation of the magnitude of the challenge. to put the challenge in some context, i want to outline some of the fundamental truths and realities the we will have to deal with in achieving that vision. first, there is no question that global demand for energy will continue to increase, driven in large part by a world population growth from about 6.6 billion people today to over 8 billion people by two thousand 30 -- by 2030. a good deal of this growth will begin developing countries.
5:51pm
in those countries there is a strong desire to achieve economic prosperity and the standard of living similar to our own. the international agency -- international energy agency projects that the demand for energy will increase about 40% between 2007-2030, with essentially all of this growth coming from developing countries. in context, that is roughly equivalent to adding two countries the size of the united states to the world's consumption in the next 23 years. meeting that demand is estimated by the iea to require investments of about $26 trillion, with over half of this investment being made to developing countries to meet their growing demand. the iea projects that fossil fuels, oil, natural gas and coal will remain the dominant sources
5:52pm
of energy worldwide, still comprising about 80% of global energy demand and 2030, or about the same percentage as it is today. in terms of petroleum liquid demand alone, the current global production is almost 87 million barrels per day. that will need to increase to 105 million barrels by 2040, with all of that demand growth coming from the developing countries. in the developed world, we will actually see our oil use decline in that time. kohl will see the biggest increase in demand after 2030, followed by natural gas. the primary driver of that increase in demand for coal and natural gas is power generation, again primarily in developing countries. it is pretty interesting to think about the fact that today, as we sit here with air- conditioning and electricity, 1.5 billion people, over 20% of
5:53pm
the world's population, still lacks access to electricity. again, you can begin to understand why their demand for energy is going to grow. the i e a project that sources such as biomass, solar, wind, tides, and geothermal will increase to 12% to 2030. -- to 12% by 23. these are global estimates. some of you may be saying that surely in the u.s. we will do much better in comoving away from the use of fossil fuels. the international energy association recently released their outlook. they showed fossil fuels still comprising about 87% of overall u.s. energy uses in 2035, -- comprising about 80% of y
5:54pm
overall u.s. energy and 2035, down from about 84% now. those who would suggest that in the near future -- in many cases, the perception is that tomorrow there will be a technology so bold will render fossil fuels obsolete or allow renewable the other alternatives to be technically viable and available at scale across the globe. it is simply not part of the reality or physical capacity of engineering and economics. for those who have seen the proposed legislation and the targeted reductions in greenhouse gas emissions of 17% in the 2020 -- by 2020 -- i do
5:55pm
not know about you, but it is difficult for me to understand what that really means. if we were to replace today's global transportation system -- that means all of the cars, buses, trains, planes, ships in the world -- if we were to replace those tomorrow with a zero carbon solution, we would reduce greenhouse gas emissions by only 15%. if we were to replace our entire global power generation system, we would reduce emissions by only 25%. the complete transformation of our global power generation and transportation infrastructure would achieve only a 40% reduction in greenhouse gas emissions, well short of an 80% or so reduction target. of course, in 2009, the united states reported a 7% decrease in
5:56pm
greenhouse gas emissions. unfortunately, it took a recession and 10% unemployment to do so. all of this i hope gives you a sense of the complexity and magnitude of the challenge that we face in achieving long-term energy security, environmental sustainability, and economic competitiveness. can we deal with these challenges? can we deal with these realities? you bet. but what should be clear is that there is no simple solution, no quick fix, no one energy source that will meet our needs. the solution to these challenges are inherently long-term and must transcend not only short term interest and election cycles. let me briefly outline what i believe our path forward should be. we need a comprehensive, integrated plan to transition, to build a bridge to a clean energy future. i think that plan would focus on
5:57pm
three key elements. the first is, greater energy efficiency and conservation. the second is, we need to diversify and increase the sources of our increasingly cleaner energy supplies. the third, which really sort of underpins the first two, is the need for innovation in new technologies. this will indeed devote greater efficiency and conservation. we will develop new energy sources, new, cleaner energy sources but also protect the environment. the plant unrecognized -- the plan should recognize that there are actions we can take today that will have a tremendous impact while developing energy solutions and investing in infrastructure for the long term. for example, the greatest source of near-term greenhouse gas reductions comes from energy efficiency, which is the least expensive than the fastest means of doing so.
5:58pm
a global institute has indicated that energy demand in 2020 could be reduced by more than 20% through energy efficiency investments that would avoid 8 billion tons of greenhouse gas emissions, and more importantly , would pay for themselves. the new fuel efficiency standard of 36 miles per gallon by 2020 is a step in the right direction. further increases in the efficiency of the internal combustion engine and greater use of hybrids could generate further reductions on an accelerated basis. solar policies can and are being applied to energy efficiency in the residential and commercial sectors through more aggressive building codes and compliance standards. i believe the balance of government regulations, standard
5:59pm
and incentives are the best way to achieve this. the other near-term action we could take is greater use of natural gas. over the last few years, we have gone through a major change in domestic natural gas. natural gas resources have more than doubled thanks to technology that now allows us to economically developed them. it is estimated that the u.s. is now sitting on between 50-100 years worth of natural gas resources at current rates of consumption. consider this. our natural gas generation capacity exceeds our call capacity -- coal capacity. natural gas plants are used to meet peak demand, so we have to have the ability to scale up and down on that.
6:00pm
because natural gas in that half the co2 as coal, we could reduce greenhouse gas emissions with relatively small investments by maximizing the use of our natural gas-fired capacity to a higher level. . . these near term actions significantly increase focus an emphasis on energy efficiency and conservation and increase use of natural gas make sense today and could achieve significant greenhouse gas reductions at a fraction of the cost and time of other options. they also provide a bridge to the future, giving us time to diversify and increase our sources of clean energy to build
6:01pm
out the significant infrastructure needed to distribute these new energy supplies and to pursue the technological innovations needed to moderate demand, increased supplies, and protect the environment. then we move to the second element of that strategy to deliver energy security, and that is diversity and supply. diversity equal security and comes into force. diversity in the forms of energy we use and to wear come from. given the substantial growth and demand for energy i discussed before, we need to significantly increase the supplies of all forms of energy, wind, solar, geothermal, nuclear, wait, biofuels, an oil, gas, and cold. the bottom line is, our strategy cannot be either-or, it has to be all of the above. each form of energy has it's own
6:02pm
set of issues that have to be dealt with, such as food versus fuel and land use debates for some biofuels, the noise pollution coming from wind turbines, or the waste disposal associated with nuclear plants. many people regard fossil fuels as yesterday's energy, but despite their inclination to do so, it is critical that our elected leaders not pick winners and losers based on what is politically popular or expedient, but rather on sound technical, commercial, and economic bases. one such example is biofuels. my company and might industry believe in the importance of biofuels. we continue to invest in additional technology and we continue to increase the use of biofuels, but at the same time, we are very concerned about our nation's ability to meet the very aggressive and prescriptive -- restrictive federal fuel requirements.
6:03pm
the law requires renewables to increase from the previous federal mandate about 7.5 billion gallons a year by 2012, to now 36 billion gallons a year in 2022. the deal announced three-year total must be supplied in corn based ethanol by 2015. the remainder must come by advance biofuels by 2022. the reality is, the technology to manufacture the 21 billion gallons per year of advance biofuels is not yet demonstrated, not to mention their confer shall produce commercial viability or the infrastructure that will be necessary to distribute these deals on a large-scale basis. for some of us, at 2022 might seem like a long way off, but in the energy business, we require longer lead times and very large investments. 12 years is not a very long time
6:04pm
off. this is a good example of a well intended but impractical effort to focus on what appears to be a silver bullet solution to the exclusion of other forms of energy. one last point on diversity. the recipe can be enhanced by encouraging imports from secure and release sources -- diversity can be enhanced. canada's oil sands are one of the world's largest deposits, about eight times current u.s. oil reserves. it is preferable for the u.s. to process and use these oil resources than alternative foreign markets. recognizing this, as i indicated before, our company is investing $2.2 billion here in our detroit refinery to enable us to process crude oil derived from canadian oil sands and to clean dress protection tools and other prada products that our consumers need.
6:05pm
that project is the largest project going on in the state of michigan today. there is substantial opposition to importing this oil because its current intensity is slightly higher than that of most conventional oils. we are developing and implementing technology that can and will solve that problem. i use that point to transition to the file of the three key elements of an energy security strategy, which is the need for innovation and new technologies. as i stated earlier, technology and innovation are vitally important in increasing the supply of into, moderate demand, and protecting the environment. there is a tremendous amount of research and development under way, ranging from u.s. government and industry and university labs, technology startup companies, all the way to individuals working in their garages. all seeking major breakthroughs in energy around vehicle technologies, biofuels,
6:06pm
renewables, and carbon capture and sequestration. per the problem is these efforts are somewhat unfocused and there is little coordination are sharing of knowledge, which results in duplication, wasted effort, and longer lead times to new technology development. my philosophy is that we should collaborate in developing technology and then compete in how well and where we deploy it. a collaborative, centralized effort that would allow us to identify and prioritize those technologies that could have the greatest impact in both the near and long term, and then allocate our technical, capital resources on that basis. i also believe is critical that or innovations are developed and commercialized, there has to be a process where they can be quickly transferred and implemented in the developing countries. as i indicated before, that is where the greatest growth in energy demand is going to be.
6:07pm
solving climate as a global issue, we have to do with it in the developing countries as well. i believe the key elements of a sound energy security and environmental sustainability plan must include a keen focus on efficiency and conservation, diversity of supply, but geographic -- the development and application of new technologies that will events of charges, while at the same time allow us to utilize the rules of one of fossil fuels more efficiently and with less and -- impact on the environment. we need to deploy the solutions available now, like energy efficiency, and increased use of natural gas, while embarking on the development and implementation of longer-term solutions. now the toughest question of all, how we get this done? i believe we need a shared vision, coupled with strong, rational leadership, to bring together all of the disparate
6:08pm
and differing opinions and actions and develop and implement the types of comprehensive energy security and environmental sustainability plan i have outlined. we cannot afford to fail, ladies and gentlemen. the challenge is too great, and our time is too short to indulge in further discourse that as tight as in knots in the past. we know what we want, we know how to get there, and we know is going to take all of us working together to get it done. i thank you for your time and attention. thank you very much. [applause] >> we have about 15 minutes, and we have some questions. the first question that someone would like to answer is, how has the gulf oil spill major job more difficult -- made your job
6:09pm
more difficult? >> got a bit. i think as most of you know, we are not directly involved. we did not have an interest in the well. we did this is somewhat in the early hours after the incident in terms of some of our vessels helping respond, but for the most part, we were not involved in capping the well or the cleanup. the impact on us certainly has been reflected in the moratorium that was imposed on deepwater drilling. at the time that occurred, we had one well drilling in the gulf of mexico that we have since suspend operations on, prior to reaching the total depth. we have turned the real blues and hope to get back to that well as soon as possible. -- turned to the well off. >> it has caused the industry to
6:10pm
certainly look at all of our processes, from the design, construction, drilling, completion of the well, to ensure that we don't have a similar blow out again. in the unlikely event we do, we have the capability to respond and contain it at the seashore, whether it is 5,000 feet of water or 3000 or 7000. we have the technology and capability to contain it at the sea floor, and to the extent that any of the oil were to get to the surface, to ensure that we have learned from the beach be experienced to be able to respond better and clean up the oil before it ever impacts any of the shoreline. a lot of that learning has taken place. many of those actions have been implemented and others are on their way to implementation. as an industry, while this was a very isolated incident, we have
6:11pm
to ensure that it does not happen again. from our standpoint, the safety of our employees and the people that work for us, protecting the environment is our top priority. the issue we are dealing with now be on the moratorium is concerned about our ability, when can we start back to drilling? and the ability to get permits, and once the moratorium is lifted, we will be looking to get back to work. we have a rig it showing up in the gulf of mexico in the next few weeks that cost us about half a million dollars a day, whether it is working or not. we very much want to put it to work. we will work with the regulators to ensure we meet all the new standards and that we demonstrate our ability to responsibly drillll and explore and produce hydrocarbons in the gulf of mexico. >> what is it like for you to run a company when so many of us are trying to use less of your
6:12pm
product? >> great question. that is a first of all, i was going to speak longer, because mike has a lot of questions here, and i suspect that when i was coming. as you heard from my speech, energy-efficient see conservation is a key component of my strategy. i think that does make sense. we do need to conserve and use our resources in a much more prudent fashion. the same time, we need to be realistic. oil and natural gas will be with us for a long time. we will continue to do what we can and implement technology to use them smarter and more efficiently and with less impact to the environment, no question about it. as i have said, this transition is not an overnight one. however much you may want to use less of it, you are going to need our products for a long
6:13pm
time, and our intent is to continue as we have done for a long time, provide those products at affordable cost, and quality products. >> would you consider marathon of green company? why or why not? >> i don't exactly know what people's definitions are of a green company. we may or may not meet some people's definitions. from our standpoint, we do our absolute best to minimize the impact to the environment in all our activities. whether it is in our exploration or production or refining or marketing activities, we have set pretty strong internal standards for ourselves in terms of reducing the intensity of greenhouse gas emissions from our business. our impacts to water, land, many of those metrics are tied into the performance measures and compensation of our employees.
6:14pm
it is -- safety and environmental protection or the high priorities for our company. >> the support the research and development of fuel-efficient vehicles here in detroit which will be radically lessen the demand for oil? >> yes. again, i think that fits right in with the technical innovation and technology progression that i spoke to. there is an ongoing national petroleum council study that i cochairing on future transportation fuels out to 2035 with a look to 2050. what we know is this. there is going to be an evolution to any number of different vehicle technologies, and whether they are hybrids or all electric vehicles or all electric vehicles or